The European Commission this Thursday made a slight revision of its projection for economic growth in the European Union and in the euro area, which this year 2022 should be set at 4%, 0.3% less than forecast in the Autumn. Portugal, on the other hand, is expected to grow above the European average, with Brussels projecting a 5.5% increase in gross domestic product in 2022 (a revision from the previous 5.3%) and the country reaching pre-pandemic level in the second quarter. .
“We have a good forecast for Portuguese growth in 2022”, confirmed the European Commissioner for the Economy, Paolo Gentiloni, when asked about the national economy at the presentation of the Winter Forecasts, this Thursday, in Brussels.
Gentiloni said that this mid-term exercise does not take into account political developments in Member States, such as the January 30 elections, the result of which he declined to comment, in addition to noting that “stability is always a positive fact for these types of assessments. ”.
Moreover, he recalled the request made by Brussels in November, after the State Budget was voted down in the Assembly of the Republic, for the presentation of a new plan in Brussels as soon as possible after the new government took office. “We are now waiting for this document,” he said.
The revision of forecasts for growth in the EU results from the decline in economic activity at the end of 2021, which continued at the beginning of 2022, with the spread of the Ómicron variant across Europe. Other factors, in addition to the effect of the pandemic, contributed to the reduction in the pace of economic recovery at the beginning of this year: the shortage of raw materials and equipment, which has had an impact on industrial production, and the lack of manpower. in services. The high price of energy is another major constraint.
Thus, in the last quarter of 2021, growth dynamics slowed down sharply to 0.4%, against 2.2% in the previous quarter. But the slowdown should be brief, estimate the Commission’s technicians, who believe that the European economy will resume the growth path projected in the second quarter, with the improvement of the health situation and the normalization of trade flows at a global level.
“After a better-than-expected 5.3% growth in 2021, we are now slightly revising our estimate for 2022, which is 4% for both the EU and the eurozone,” announced the commissioner. European Economics Director, Paolo Gentiloni, this Thursday in Brussels.
The official was not concerned about the performance of recent months, ensuring that “fundamentals remain solid” and that “the economy will regain traction and expansionary trajectory” — with all EU Member States managing to exceed wealth levels. before the pandemic until the end of the year.
For 2023, the Commission estimates a more moderate growth of 2.8% in the EU and 2.7% in the euro area, slightly above the previous forecast of 2.5%. Portuguese GDP is expected to grow by 2.6% next year.
According to Gentiloni, private consumption, which should increase thanks to the recovery of employment and record levels of accumulated savings, will continue to be the main driver of economic growth.
“Investment will continue dynamic, with the maintenance of favorable financing conditions, and the great impetus of the execution of the national recovery and resilience plans in the next two years”, added the commissioner.
In these winter forecasts, the Commission was obliged to recalculate its estimates for inflation, which in 2021 had a “considerable” rise and much faster than expected in the previous year, reaching a record value of 5.1% in January. of 2022.
The revised figures point to a peak of 4.8% in the first quarter of this year, and a decline to above 3% in the third quarter.
Gentiloni once again blamed the rise in energy prices, as well as the problems in the global supply chain, for the phenomenon – which the Commission continues to point out as temporary, with inflationary pressure easing throughout this year to a value of less than 2% in 2023 (1.7% in the euro area). That is the benchmark and objective of the European Central Bank.
The Economy Commissioner highlighted the risks and uncertainties that still hang over the economic recovery, namely if the costs of inflation end up being transferred from producers to consumers to a greater extent than expected, “amplifying the risk of second-round effects”.
However, the big dark cloud is geopolitical instability, and the situation of tension and stalemate in Eastern Europe, which represents “a marked risk to growth prospects”.
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