LISBON, Sept 10 (Askume) – Portugal’s government expects the economy to grow at an annual rate of about 2% in 2024 and 2025 and expects to post a small budget surplus in both years, a person familiar with the matter told Askume on Tuesday.
The forecasts, which are slightly lower than last year’s forecasts, are part of a draft economic outlook for the 2025 budget submitted by the center-right minority government to the opposition, sources said. The government declined to comment.
The new government has faced several setbacks in Parliament since taking office in April
However, Prime Minister Luis Montenegro and main opposition Socialist leader Pedro Nuno Santos recently said they were willing to negotiate on the budget to avoid another snap election after two snap polls in two years.
The government expects a budget surplus of 0.3% of GDP this year and 0.2% in 2025, while primary spending is expected to grow 8% this year and 4%-5% in 2025, including debt service, the sources said. Tax revenue is projected to grow 4% to 4.5% annually.
Last year, the economy grew by 2.3% and the budget surplus reached 1.2% of GDP – the strongest figures in the country’s 50 years of parliamentary democracy.
The new government has increased pensions and public sector wages and promised tax cuts for the middle class, young people and businesses to boost economic growth.
Portugal’s economy grew just 0.1% in the second quarter, compared with 0.8% in the first three months, hit by weak net exports and slow private consumption.
