2024: Economic Forecasts

Economic forecasts for 2024 indicate a sharp slowdown in the global economy, as all economic blocs (United States, China, EU, etc.) reveal different difficulties. Note that this global “syndrome” reflects challenges and opportunities as in any economic cycle.

The United States saw the political indecision of the future presidential candidates and their high internal debt (Ukraine’s war effort); China because its growth rate is continually lower than the natural rate; and, the European Union as a result of its strategic dependence. This analysis is a simplistic approach, however, representative of the current reality because the focus is on forecasts per se (particularly the European Union and Portugal).

The OECD lowered its Portuguese growth forecast to 1.2% in 2024 due to reduced confidence among families and companies (pessimism). There are several reasons: i) the political scenario of early elections; ii) the behaviour of interest rates; and, iii) the price of energy. Thus, instead of the 2.5% (2024) and 1.5% (2025) predicted in June, the current forecast, I repeat, is 1.2%. However, in 2025 the expectation is around 2.2%, due to national economic activity from the labour market perspective (resilience).

In 2025, the European Commission estimates growth below the OECD (1.8%). For 2024, 1.4% is expected as a result of the decrease in the inflation rate associated with the sharp drop in energy prices (not yet felt by the end consumer). The Commission points out that “weak external demand, as well as the increase in interest expenses by families and companies, will maintain moderate economic growth in the short term”.