Finance Minister confident in “economic growth above 2%”

The Minister of Finance believes that the Portuguese economy will grow by more than 2% this year, despite international uncertainty. For Joaquim Miranda Sarmento, the next few quarters will make up for the lower than expected performance at the start of the year.

“We continue to expect economic growth above 2%. The next few quarters will correct the data from the first quarter”, he said on Tuesday during the Banking on Change conference, organised in Lisbon by ECO with KPMG and PLMJ.

Miranda Sarmento recognised that there is international uncertainty, but reiterated his forecast of a budget surplus of 0.3% this year and a reduction in public debt to 91.5% of GDP.

The government included in the State Budget for 2025 a forecast for economic growth of 2.1% this year, but revised the projection upwards to 2.4% in the medium-term forecast submitted to Brussels. This outlook is also included in the electoral programme of the AD – PSD/CDS-PP Coalition.

The growth of the Portuguese economy slowed down at the start of the year, a scenario expected by economists, but the extent of the slowdown came as a surprise. Preliminary data from INE, the Portuguese Statistics Institute, reveals that GDP advanced by 1.6% year-on-year in the first three months, after having risen by 2.8% in the previous quarter — a development that results from the slowdown in private consumption and the deceleration in exports of goods and services.

The data also indicates that GDP contracted by 0.5% in the quarter-on-quarter comparison, whereas in the previous quarter it had risen by 1.4%. According to INE, this result reflects the combination of a zero contribution from domestic demand (after being positive in the last three months of 2024) and a negative contribution from net external demand.

According to ECO calculations, in order to achieve the growth target of 2.4%, GDP will need to advance by around 3% between April and December, corresponding to an average quarterly growth of around 1%.

Miranda Sarmento pointed out that the economy’s big numbers were better than expected last year, recalling that the national economy grew by 1.9%, the budget surplus totalled 0.7% of GDP and the public debt ratio fell to 94.9%.

The minister reaffirmed the government’s “commitment” to “seeking solutions to the Portuguese people’s problems, keeping public accounts in balance and focussing on growth and increasing the economy’s productivity”, as well as strengthening investment.

According to Miranda Sarmento, public investment will also continue to be boosted, with the acceleration of the implementation of the Recovery and Resilience Plan (PRR) and European funds, in which he emphasised the importance of the Banco de Fomento.