Manuel de Almeida / Lusa
BANCO DE PORTUGAL contradicts government numbers: Economy will grow (much) less than expected.
O BANCO DE PORTUGAL (BDP) continues to predict a return to negative budget balances this year, having aggravated the deficit forecast from 2026 to 1.3% Gross Domestic Product (GDP), according to the Economic Bulletin released today.
In the December newsletter, the last one that included budget projections, the Central Bank had foreseen a 0.1% GDP deficit this year, a forecast it maintains, but now aggravates the negative budget balance from 2026 from 1% to 1.3%.
This new forecast contrary the forecast of Government, who points to surplus 0.3% this year and 0.1% in 2026.
To 2027, the Central Bank’s perspective remains a budgetary deficit of 0,9%.
The BDP justifies these projections with the “Expansionary pro-cyclical policies” that are being applied.
The body also has projections for orpublic debtwhich should continue to decrease along the horizon of projection, from 94.9% in 2024 to 85,8% In 2027, although with a rhythm of reduction “lower than the last years”.
In the June Economic Bulletin, the institution led by Mario Centeno warns that “although the Portuguese position remains favorable in the context of the euro, it is fundamental contain budget deterioration, ensuring compliance with European budgetary rules ”.
“A high public debt It remains a vulnerability, ”warns the BDP, arguing that“ Portugal will have to preserve a sustained reduction trajectory of indebtedness, given the structural challenges that will continue to mark the near future: public investment, especially in the area of climate, digital and defense transition and the budgetary consequences associated with population aging ”.
But… it can even be good
Economist Ricardo Ferraz recalls that Only Banco de Portugal provides for deficits budgetary for this year. No more institution has these predictions, for now.
Ricardo warned on RTP that current expense It has indeed grown a lot in recent years, with salaries and pensions, especially.
But, analyzed, “It is important for institutions to be aware and warn governments for public finance control – Which, as we know, was the Achilles heel of Portugal for a long time. ”
Therefore, Banco de Portugal numbers can even have a positive effect: “I welcome this kind of warnings, these alerts, because usually have positive effects on government. In a way, they do, ‘If anyone thinks this can happen, then let’s do everything so that it doesn’t happen.’ Contributes to the control of accounts. ”
However, Ricardo Ferraz has “Many doubts” that this forecast is realize. Only an “much more serious” external conjuncture would give rise to a budget deficit in Portugal.
Warning about work
The governor of Banco de Portugal warned today to the dynamics in the Portuguese labor markethaving verified a net destruction of jobs in the last six months.
At the presentation of the June Economic Bulletin in Lisbon, Mario Centeno wanted to leave an alert about the labor market, which has been a “pillar” of economic activity.
“We have six consecutive months of net destruction of jobs, not employment; The last time this happened was in the first trimester of 2013, It is one of those alerts that fit the BDP to do in sensitive areas, ”said the governor.
This area is even more sensitive, he argued, since “ changes in the labor market tend to be abrupt ”, even when they are not large.
As first manifestations They are usually at the rate of hiring and at the rate of undoing of employment (separations), he noted, being precisely in these indicators that there has been a change in trend in recent months.
Centeno, who is approaching the end of his term in front of the BDP, reiterated that he leaves this warning because “much of the health of the Portuguese economy and the euro area is supported by the labor market.”
“And a complacency It’s something we owe avoid in economic policy, ”he added.
In this bulletin, the BDP foresees a Springs of employment and salarieswith unemployment rate keep stabilized in 6,4%.
