NECEP - Católica Lisbon Forecasting Lab - is communicating its forecasts for the Portuguese economy this Wednesday. All indications are that the Portuguese economy's activity level will have been, on the 3rd quarter, the largest since the beginning of the pandemic and the confinement policies that were introduced in March 2020. Therefore, the Portuguese economy will have grown around 1.5% in chain or 2.9% in comparison with the same quarter in the previous year, and would be operating at around 95,6% of the level registered on the 4th quarter of 2019, the last without any pandemic and confinement effects.
The rest of the year should be influenced by the combined effect of the intensity of restrictions to the economic activity in Portugal and Europe, but also the international economy, which shows some signs of slowing out of the United States, China and the Euro Zone. The scenario for GDP growth in 2021 is now 3.7%, an upwards revision of 0.2 percentage points, explained by the recent improvements in services and exports, which would place the Portuguese economy operating at around 95% of its 2019 levels, worse than previously anticipated - due to the revisions introduced by the INE in late September. Uncertainty is still large, and therefore growth may oscillate between 3.2% and 4.2% this year, depending on the intensity of limitations to economic activity and the size of budget support to companies and families that have been most affected by this crisis.
For 2022, NECEP predicts growth of 4,3% which would, in principle, allow for a level of activity equivalent to 99% of 2019 levels. From there on, growth should slow back down to around 2% with the predicted return of budgetary measures in 2023, as a way of bringing public debt down to sustainable levels in the medium and long run.
The inflationary tensions that are observable currently both on the European level and in the USA should also register in Portugal, with an expected inflation of 1.0% this year, and 1.3% in 2022. Unemployment, on the under hand, may fall below 7% in 2021, with a central scenario of 6,7%, the evolving to 6,2% in the following year. In any case, there may be temporary hikes in unemployment, related to labour market adjustments after the strong public intervention it has undergone.