Portuguese Prime Minister Antonio Costa and government ministers are set to hold the State of the Nation debate today.
The debate is likely to include both a sober evaluation of the nation’s economy and optimism regarding its nascent recovery. Portugal did not escape the global economic downturn wrought by the pandemic—its economy contracted 7.6% last year and its budget deficit in Q1 2021 grew to 5.7% of GDP because of increased spending and fewer tax receipts.
Expect today’s debate to be relatively muted as uncertainty remains pervasive. Regardless, economic opportunities and forecasts for the short- to medium-term are optimistic. Portugal’s central bank projects the economy will grow by 4.8% this year. Likewise, initial funds from the EU’s recovery program are set to imminently be disbursed, these grants and loans could add approximately $26 billion to the economy over the next five-years through infrastructure development and the digitization of public administration functions.
Raising caution, a recent surge in COVID-19 cases has nevertheless prompted additional lockdown protocols, threatening to delay recovery projects and blunt the summer tourist season. Expect the most contentious topics of today’s debate to center on the extent of COVID related restrictions to optimally balance public health and the economic recovery.
Julian is a Research Analyst for The Daily Brief where he is a regular contributor. As a researcher and writer, Julian specializes in the political economy of East Asia and global macroeconomic developments.