Bank of Portugal Lowers Growth Forecasts Through 2017 on Exports

  • Sees risks from slower expansions in emerging markets
  • New minority government aims to ease austerity measures

Portugal’s economy will expand less than previously forecast for the next two years because of weaker export growth, the country’s central bank said.

Gross domestic product will rise 1.7 percent in 2016 and 1.8 percent in 2017, down from the 1.9 percent and 2 percent forecast in June, the Lisbon-based Bank of Portugal said on Wednesday. It also cut its 2015 projection to 1.6 percent from 1.7 percent.

“The main risk factors are the possibility of a more moderate recovery of global activity and global trade flows, particularly in emerging economies,” the central bank said. Information on new budget measures for 2016 and 2017 wasn’t available to be included in these projections, it said.

Prime Minister Antonio Costa was sworn in late last month and his minority Socialist government plans to reverse state salary cuts and bolster family incomes, easing austerity measures faster than the previous administration proposed. Costa says he can do that and keep the budget deficit within the European Union limit of 3 percent of GDP through 2019.

Government spending will rise 0.1 percent in 2015, 0.3 percent in 2016 and 0.1 percent in 2017, the central bank said. Exports will rise 5.3 percent in 2015, though the pace of increase will slow to 3.3 percent in 2016. Inflation will be 0.6 percent this year and accelerate to 1.1 percent in 2016.

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