IMF predicts moderate financial growth for Portugal
(MENAFN) Portugal's Economy is expected to grow by approximately 2 percent in 2024, with a slight rebound to 2.25 percent in 2025, according to a statement by the International Monetary Fund (IMF) on Monday. Despite these projections, the IMF anticipates that Portugal's economic growth will remain below 2 percent in the medium term. The primary factors contributing to this restrained growth are the country's aging population, low levels of investment, and sluggish productivity growth, as outlined in the IMF's Staff Concluding Statement of the 2024 Article IV Mission.
The IMF also projects that headline inflation will fall to 2 percent next year, with core inflation following a similar downward trend. In addressing the balance between growth and inflation, the IMF emphasized the importance of fiscal policy aimed at achieving a surplus in 2024 and maintaining a broadly neutral stance thereafter. "For 2025, a broadly neutral fiscal stance, combined with the expected gradual loosening of the ECB’s monetary policy, will help achieve a soft landing of the economy. Any further relaxation of the fiscal stance would risk rekindling inflation," the statement noted.
Highlighting Portugal's fiscal achievements, the IMF praised the country's large fiscal surplus last year and the significant reduction of public debt by 36 percentage points of GDP since 2020. Additionally, the IMF observed that Portugal's economic growth in 2023 surpassed the euro area average, while its inflation decelerated at a faster rate.
Overall, while the IMF's projections for Portugal indicate moderate growth and controlled inflation in the coming years, the report underscores the challenges posed by demographic and structural factors that could impede sustained economic expansion in the medium term.
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