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 GameStructural 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 PoliticsCoalition Stability To Be Increasingly TestedLong-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