Portugal maintains 2022 deficit forecast
Lisbon:portugal swung to a budget surplus of 0.8 per cent of gross domestic product in the first half of 2022 from a deficit of 5.7 per cent a year ago, the National Statistics Institute (INE) said on Friday, although it let its full-year deficit forecast unchanged.
In an update of the country’s excessive deficit procedure reported to Brussels, INE said the fiscal gap this year should narrow to 1.9 per cent of GDP - as budgeted by the government - from 2.9 per cent in 2021.
High inflation has contributed to the first-half surplus, as did continuing economic recovery, with tax revenues soaring 20.7 per cent, INE said.
Portuguese inflation reached 9 per cent yearon-year in August, according to latest available data, more than double the 4 per cent forecast in the 2022 budget.
INE said that in January-june this year total revenues rose 12.4 per cent, while spending fell 3 per cent.
With inflation weighing on private consumption, the economy lost momentum in the second quarter, but still expanded by a strong 7.1 per cent compared to a year earlier, ater growing by 11.8 per cent in the first quarter.
The Bank of Portugal expects the economy to grow 6.3 per cent this year.
Filipe Garcia, economist at Informacao de Mercados Financeiros consultants, said that “Portugal’s budget execution environment remains exceptional and probably unrepeatable”, as strong growth and high inflation are generating important revenues from consumption, energy products and real estate.
At the same time, expenditure was planned at 2021 prices, in a context of low unemployment and debt interest are still at very low levels, he said.
He said 2023 “will be much more challenging in all respects and should require additional prudence” from the government.