Economic outook- 2sd semester 2023

Second semester 2023 acknowledges a promising economic outlook for Portugal and, a challenging and divergent global scenario. This scenario encompasses contextual quandaries, as for instance the ongoing conflict in Ukraine, underlying political and economic tensions between China, USA, and European Union (UE), as well as, profound climate changes.

At national level, Portugal latest predictions, acknowledge a continuous positive period of 8 years upon Gross Domestic Product (GDP). The European Commission forecast for Portugal resumes an economic growth around 2.4% in 2023, surpassing Euroarea and EU economies, which indicate ranges of 1.1% and 1% accordingly. This growth reflects a strong performance over 2022 and 2023 first quarter, driven by exports, tourism, and the World Youth Day.

And, on a global scale, economic recovery is slowing down with disparities among sectors and regions. The global growth projection has contracted from 3.5% to 3.0% in 2023 and 2024 as a result of interest rates behaviour as a way to diminish inflation by central banks. Therefore, global inflation is expected to decrease from 8.7% to 6.8% in 2023 despite remaining risks. Financial stability remains a continuous concern, with potential tensions in markets in response to restrictive monetary policies.

However, European leaders prioritise financial stability and inflation control; so, it is reasonable to expect that central banks behaviour will remain unchanged, while countries build fiscal reserves and implement fiscal adjustments targeted for the most vulnerable. Even so, it’s worth mentioning that supply-side stimuli facilitate fiscal consolidation and a gradual reduction upon inflation.

In summary, second semester 2023 denotes opportunities for Portugal, but the global economy will face complex challenges that will require coordinated actions to ensure a sustainable recovery.