Portugal | Messy politics will dent 2022 growth
Political turmoil in Portugal will delay the execution of some EU recovery funding and freeze key stimulus measures planned for next year. Consequently, we will lower our 2022 growth outlook to around 4.5% from 5.2%. A large slice of the lost output should be recouped in 2023-2024 after a new government resumes spending the EU money.
What you will learn:
- A key risk is that a new government may decide to depart from the current plan, further hampering, or even putting in jeopardy, disbursement of the recovery funds.
- Although the political crisis is not welcome news for investors, the initial response from markets has been muted.
- Portugal’s 10-year bond yields have risen in recent days, but it doesn’t look like Portugal is being singled-out – the increase is similar to that affecting other countries in the eurozone periphery.
Tags:
Related Services
Post
APAC Key Themes 2026: Paybacks, policy offsets and trade
We believe APAC will remain the strongest global performer in 2026. However, the growth trajectory will likely be more uneven than in past cycles.
Find Out More
Post
Japan’s fiscal policy will remain loose, which increases risks to debt sustainabilit
We've changed our fiscal outlook for Japan in our December forecast round. We now expect the new government to set a primary deficit close to that of 2024, at 2%-3% of GDP for 2025-2027, instead of restoring a balanced budget by taking advantage of strong tax revenue. We assume higher bond yields will force the government to take measures to reduce the deficit from 2028.
Find Out More
