IMF reviews Portugal GDP growth projections to 1.7%

The International Monetary Fund has reviewed its projections for the Portuguese economy in 2017.

The IMF took an optimistic view last October predicting a growth in GDP in 2016 of 1.1%. This month the IMF updated projections for the Portuguese economy. GDP they said could grow by 1.7% in 2017 and 1.5% in 2018.

The Portuguese government has been a little more optimistic predicting growth of 1.8% in 2017 and 1.9% in 2018.  That growth is filtering down to unemployment levels which are now below 10% which is a far cry from the 16% + rate experienced in the GFC.

There is clearly a long way to go however and the IMF noted concerns with debt levels and the balance sheet of banks. However, longer range forecasts indicate that the economy is on the right track.

Lisbon: Running for European Green Capital 2019

Earlier this month, the European Commission announced the five finalists for the European Green Capital Awards 2019.

Lisbon is the first capital in Southern Europe to be selected. This was a  "historic” achievement, according to Jose Sa Fernandes – Lisbon Councilor for Green Policies. He went on to say: “In recent years, the city has been improving substantially in all environmental parameters: green infrastructure, water, energy, mobility, quality of public space and waste”.

Fourteen cities applied. Five were chosen all but Lisbon from Northern Europe (Ghent, Oslo, Tallinn and Lahti).

The European Green Capital for 2018 winners will be announced on June 2nd in Essen, the European Green Capital for 2017.

In considering the merits of each city's application the European Commission looks at innovative urban environmental management and initiatives which have taken hold and also looks for cutting-edge, environmentally-friendly urban living. Award winning cities lead the way in setting higher standards in sustainable urban development, listening to what their citizens want and pioneering innovative solutions to environmental challenges.

Portugal ranked world’s 14th most competitive tourist destination

The World Economic Forum has released the 2017 Travel and Tourism Competitiveness Report ranking Portugal at 14.

Rankings are a wonderful concept whose underpinnings are a complete mystery. However ranked last was Yemen at 2.44 points and at the top of the list was Spain at 5.43 points. Out of a maximum of 7. Portugal came in at 4.74 points behind Australia at 5.10 but ahead of a raft of great destinations including New Zealand, Greece, China,  the Netherlands, Sweden, and Norway. The Yemen tourism office was closed for comment.

The World Economic Forum has, for the past 11 years, engaged leaders in travel and tourism to carry out an in-depth analysis of the Travel and Tourism competitiveness of 136 economies across the world. This index measures “the set of factors and policies that enable the sustainable development of the travel and tourism sector”.

Compared to last year’s results, Portugal jumped one place in the ranking.

Portugal scored best on Tourism Service Infrastructure  (4th place) and Safety and Security (11th place).

Interpretation of data is always subjective but nevertheless, there is no doubt that tourism contributes significantly to the Portuguese economy (perhaps over 16% of GDP) and it is important that Portugal climbs up that ranking ladder.

Portugal: Latest Key Developments

March and April 2017

National & Sectoral Accounts

GDP recorded a y-o-y increase of 2.0% in the last quarter of 2016, up from 1.7% in the third quarter and 1.0% in the first half of the year. This reflects a more positive contribution from domestic demand, whilst net external demand registered a negative contribution. The improvement of domestic demand is the result of a more vigorous growth in overall private consumption and investment (especially construction and transport equipment).

The deficit target is lower at 1.5% of GDP and anticipated to be 1.3% in 2021. The debt to GDP ratio is declining and predicted to be 109.4% by 2021. Reality obliges us to note that at December 2016 levels only Italy and Greece had higher ratios in Europe and Portugal Cyprus Belgium Italy and Greece were the only countries with ratios higher than 100 %. If those debt levels seem insurmountable then bear in mind that global debt is 325% of World GDP.

Tourism Industry

In January, hotel establishments recorded a y-o-y growth of 12.6% in overnight stays (+10.6% in December), due mainly to the external market. The average revenue per room increased by 14.0% y-o-y (+10.1% in December). The increase in February was 7.9% in overnight hotel stays and average revenue grew by 15.4%.

Labour market

The provisional unemployment rate for February was 10.1%, 0.1% below the definitive estimate for January. For March the estimate was 9.8%.

Source: GPEARI