The health crisis will cause in Portugal economic recession of 6.9% and the unemployment rate is expected to reach 9.6 per cent, according to the estimates entered by the government in the supplementary budget that must be adopted Tuesday by the council of ministers.
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The new macroeconomic scenario has been unveiled in the decree, published Saturday evening in the official journal, detailing the steps of a “Program of economic stabilization and social welfare”, adopted last Thursday to help households and businesses most affected by the impact of the outbreak of coronavirus. “By 2020, we anticipate a strong contraction of the Portuguese economy due to the economic shock caused by the pandemic of the disease Covid-19 and restraint measures implemented,” says the document.
a historical perspective
The decline of the GDP, estimated to be 6.9% after a growth of 2.2% in 2019, will represent “the largest contraction over the past decades”, says the text. After the fall of the GDP of 2.3% is already observed in the first quarter, the negative effect of the pandemic on economic activity will be felt primarily in the second quarter of 2020″, considers the government.
The executive socialist expects a resumption of growth of 4.3% in 2021. This year, exports will drop by 15.4%, the investment will decline 12.2% and the consumption of households will decline by 4.3%, while public spending will increase by 3.1%. The unemployment rate is expected to grow to 9.6%, compared to 6.5% last year, according to forecasts accompanying the stabilisation programme, framing the response of the government until the end of the year.
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These forecasts did not include the estimate of the deficit for 2020, but it should be “between 6 and 7%” of GDP, said Friday the minister of Finance Mario Centeno, in an interview with public radio Antena 1. In 2019, Portugal had achieved a budgetary surplus of 0.2% of GDP, a historic achievement for a country that had been subjected to a severe austerity cure to overcome the crisis the debt that struck in 2011.
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