In the forecast update, the European Commission has revised up Portugal's growth to 5.5 % in 2022, up from the previously estimated 5.3 %. Eurozone GDP has been revised downward.

European Commission revises Portuguese GDP upwards to 5.5 % in 2022

Following growth of 4.9% in 2021, Portugal is heading for an economic expansion of 5.5% this year, according to the European Commission's latest forecasts published on Thursday. This figure represents an upward revision from the 5.3 % previously forecast by the European executive. For 2023, it forecasts GDP growth of 2.6 %, up from 2.4 % in the autumn.

In its winter forecasts, the European Commission indicates that the recent wave of Covid-19 infections at the start of the year, together with a "further decline" in international tourism, should have slowed economic activity to 0.5 % quarter-on-quarter growth in the first quarter. It should be noted, however, that these forecasts only take into account January data, and that there is still a month and a half to go before the end of the quarter.

Assuming the pandemic situation improves, the EU executive sees the Portuguese economy accelerating in the second quarter, anticipating that this is when GDP will reach its pre-pandemic level, in quarterly terms. For the year as a whole, gross domestic product should accelerate to 5.5 % growth in 2022, then slow to 2.6 % in 2023.

In the case of Portugal, the European Commission considers that these forecasts still carry a degree of risk, as it is possible that international tourism could be affected again by an unforeseen event linked to the pandemic and travel disruptions.

As far as 2021 is concerned, the Community executive affirms that the growth of 4.9% already confirmed by the French National Institute of Statistics (INE) translates into a recovery of just over half the value lost in 2020, with GDP falling by 8.4%. The investment and goods export components have already exceeded pre-pandemic levels in 2021, according to the Commission, but this is not yet the case for private consumption and especially services exports (tourism).

European Commission revises euro zone growth downwards

The upward revision of the outlook for Portugal contrasts with the downward revision of GDP for the eurozone. Whereas in the autumn, the EU executive forecast 4.3% in 2022, growth is now expected to reach 4%. However, expansion in 2023 has been revised upwards, from 2.4 % to 2.7 %, according to the new winter forecasts.

Thus, in both 2022 and 2023, European Commission figures indicate that Portugal is converging towards the eurozone average, as the Portuguese economy is set to grow at a higher rate, in contrast to what happened in 2020 and 2021. Last year, the eurozone economy grew by 5.3 %, higher than Portugal's 4.9 %. And in 2020, the Portuguese economy shrank more than that of Europe as a whole.