Portugal Economic Outlook. Second quarter 2021

Summary

GDP contracted by 7.6% in 2020. Increased uncertainty about the spread of COVID-19 and the measures implemented to contain it weighed on activity. The economy is set to slow over the coming quarters and is expected to grow by 4.0% in 2021 and accelerate to 5.1% in 2022.

Key points

• Key points:
• Employment flexibility measures and remote work have helped to contain the impact of this crisis on the labour market, at least for the time being.
• Despite the difficult situation, Portuguese exports of goods have increased its share in the world market, above 2008 levels and above those of other Eurozone countries.
• The scenario for 2021 remains unchanged: vaccination, European funds and the international environment are key to support the recovery.
• GDP is expected to accelerate towards 2022, given the fiscal impulse in EMU and the US.
• Risks: control of the disease and the speed of the vaccination process; the consequences of the crisis on employment and business; the implementation of projects related to the NGEU programme; and how ambitious the reforms to be implemented over the coming years will be.

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