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Portuguese economy expected to grow by 1.5% in 2024

Portugal’s new government expects the economy to grow by 1.5 per cent in 2024, in line with what the previous administration forecast in November and below the 2.3 per cent last year, it said in a document published on Monday, Euractiv reports.

The forecast is part of the Stability Programme (SP) for 2024-2028, which the government sent to parliament on Monday and will be sent to the European Commission this month.

The macroeconomic scenario presented by the executive branch is developed on a policy invariant basis, meaning that it only takes into account policies developed by the previous government and measures already planned.

The Finance Ministry forecasts GDP growth of 1.5% this year and 1.9% in 2025, based on information available as of 31 March.

The state budget forecast for 2024 (OE2024) presented by the previous government assumed 1.5% growth this year, while the election programme of the DA (the coalition that united the PSD, CDS-PP and PPM to contest the March 10 general election) was based on the 1.6% forecast made by the State Finance Council for this year.

In updated forecasts by the financial council published this month, the Nazaré da Costa Cabral-led organisation kept the Portuguese economy growing at 1.6% this year and predicted a 1.9% expansion in 2025.

But while the Bank of Portugal sees GDP growth of 2%, the European Commission and the Organisation for Economic Co-operation and Development (OECD) see it expanding by 1.2% and the International Monetary Fund (IMF), which will publish new forecasts on Tuesday, sees it expanding by 1.5%.

In its election programme, the DA predicted growth of 2.5% in 2025, rising to 2.7%, 3% and 3.4% in 2026, 2027 and 2028 respectively. In the Stability Programme for 2023-2027, the previous executive envisaged growth of 2% in 2024 and 2025.

The presentation of the Stability Programme this year is a formality as the document loses weight due to new EU budget rules, being replaced by medium-term budgetary and structural plans that member states have to submit to Brussels by 20 September.

The EU will not decide on the countries’ stability programmes, allowing the submission of a simplified programme that will even allow only two tables related to the Recovery and Resilience Plan (RRP) to be submitted.

The government will start negotiations on the new medium-term programme with the European Commission in the summer, and the macroeconomic scenario that will influence the new policies will only be known in September.

The Stability Programme, approved by the Portuguese cabinet on 11 April, will be presented for discussion in parliament on 24 April. The CFP decided not to comment on the SP as it is based on a scenario of no policy changes.

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