Portugal’s stable economic performance should continue

Subject

Portugal's economic outlook.

Significance

Portugal has been one of the best performing euro-area economies since 2016. Last year the economy grew by 2%, while the Bank of Portugal forecasts growth to remain stable at 1.7% in 2020 and 1.6% in 2021. The post-crisis turnaround continues to be powered by strong foreign direct investment (FDI) and exports, including tourism, and boosted by a decline in the real effective exchange rate.

Impacts

• The threat of a global trade war has reduced following the 'phase one' US-China trade deal in January.
• A likely slowdown in the Spanish economy, Portugal’s largest export market, could weaken Portuguese growth.
• Portugal’s centre-left government will prioritise fiscal prudence this term, which will likely reduce the spread on bond yields.