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Portugal Country Risk Report Q3 2018

Portugal Country Risk Report Q3 2018

Economic activity will remain healthy over the remainder of 2018 due to strong household consumption and fixed capital investment. However, 2017 represented the cyclical peak in real GDP growth and we forecast a steadily slower rate of expansion in the coming years as spare capacity evaporates.

While the near-term economic growth outlook thus remains positive, the pace of growth will gradually slow in the coming quarters. We forecast real GDP growth to tick down to 1.9% in 2019 and 1.3% in 2020.

The solidity of the leftist coalition that has held power since the 2015 general election will be increasingly tested in the run-up to the October 2019 national poll. We see scope for Prime Minister Antonio Costa's government to shift economic policy towards the centre, opening the way for a potential new coalition between the ruling Socialist Party and the opposition Social Democrats.


Executive Summary
Core Views
Key Risks
Chapter 1: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Growth Outlook
Strong Growth Momentum, But Past The Peak
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
Monetary Policy
ECB Plays Waiting Game
Structural Fiscal Position
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES, 2016
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
Currency Forecast
EUR: Near-Term Strength To Give Way Gradually
TABLE: BMI EUROZONE CURRENCY FORECAST
Chapter 2: 10-Year Forecast
The Portuguese Economy To 2027
Crisis An Opportunity To Improve Long-Term Growth
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 3: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Coalition Stability To Be Increasingly Tested
Long-Term Political Outlook
Debt And Demographics To Pose Major Challenges
Chapter 4: BMI Global Macro Outlook
Key Divergences Emerging In World Economy
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: PORTUGAL – MACROECONOMIC DATA & FORECASTS

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