The Competitiveness Forum estimates that there was a “slight slowdown” in the economy in the second quarter of this year, warning of “budgetary and political risks” in the second half of the year, according to a note released on Wednesday.
“The Forum for Competitiveness estimates that there will have been a slight slowdown in the Portuguese economy in the second quarter, from 0.8% in the first quarter to between 0.5% and 0.8% quarter-on-quarter and from 1.5% to between 1.9% and 2.2% year-on-year,” he noted in the same document.
INE sees slight upward growth. GDP rose 1.5% year-on-year in the first quarter and 0.8% quarter-on-quarter
The bank also warned that the coming quarters will be “overshadowed by budgetary and political risks in Portugal, but also in France and the United States.”
“We had been saying that the second half of the year would bring a more dynamic performance, but this has lost momentum, both because of the better performance of the first half and because of the shadows over the second half of the year. As we have seen, the first half of the year should end with an interannual growth already close to 2%, creating conditions for an annual variation above that value. Consumers will have anticipated part of the benefits of the ECB interest rate cuts, even before they materialize,” says the Competitiveness Forum note.
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According to the entity, in national political terms, “There is great uncertainty about the 2025 budget”highlighting that “the original proposal may even be approved in general, only to be distorted in the specialty.”
However, he stressed that this budget “reintroduces European budgetary rules, which could be a significant brake on the opposition’s ability to manipulate the initial version”, but “it is not clear that there are sufficient institutional mechanisms to do so, and even less so for their application to be effective”.
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“This could put the government in a very difficult dilemma: either accept governing with a distorted budget or resign.”he said, pointing to the possibility of “significant political tensions, with the potential to have a visible impact on the economy.”
The Competitiveness Forum also highlighted the difficulties of the international situation, with political uncertainties that are “not minor”, especially in France and the United States.
France. Lagarde says the ECB is “always attentive” to political uncertainty in eurozone countries and “will do what it has to do”
“In France, we will have a second round of midterm elections, which could lead to a parliament with difficulties in forming a government or to a far-right that is uncooperative with the European Union (EU), which could lead to a community paralysis,” he said.
The US presidential election in November also poses risks, with the possibility of choosing Donald Trump, who “defends policies that are harmful to the EU.”“.
“On the one hand, there is a fear of a deepening trade conflict and, on the other, of a reduction in support for NATO and Ukraine, leaving a very significant bill in the hands of the Europeans,” he said.
The Forum believes that the second half of the year will have “wide political shadows, which could harm Portugal’s economic performance.”
Source: Observadora
