The International Monetary Fund (IMF) has lowered its growth forecast for Portugal, assuming that the national economy is suffering the impact of a general slowdown in the center of Europe. Portugal is the only country among those who were subject to a program of troika getting now with a projection lower than it had in April growth.
In the semiannual report on the world economy published on Tuesday, the IMF estimates that the Portuguese GDP will grow 1% during the year 2014 in April, when submitted its latest forecast, the fund pointed to an economic growth of 1 2%.
The review comes at a correction of the projections of global growth scenario and in particular the euro area. To the world, the IMF began to predict a growth of 3.3%, 0.1 points less than in July, when it presented its interim projections. In the euro zone, after July have already reduced the growth forecast by 1.2% to 1.1%, the IMF has become even more pessimistic now pointing to a growth of 0.8%.
The slowdown in the euro zone, where the main customers of Portuguese exports, is the main reason for the deterioration of the estimates for Portugal.
But it is true that, between April and October, the revision low made regarding Portugal is softer than the one made for the whole euro area, when the analysis is performed only between the five countries that have been subject to a program of troika , the performance of Portugal is rather less positive. It was the only country with a downward revision of growth.
In Ireland and Spain (which had the troika to oversee a program of support to its banking system) the IMF revised for high growth projections. Ireland will grow 3.6% instead of 1.7% forecast in April and Spain 1.3% instead of 0.9%.
In the case of Cyprus, the last country where the troika entered, still-lives is serious downturn. Even so, in April it was expected a recession of 4.8% this year, while now the expected drop is 3.2%. For Greece, the IMF maintained the same growth forecast for this year:. 0.6%
In these countries, after years of sharp economic contraction, now registers an improvement of the environment, facilitated also by lower interest rates on debt that has spread across Europe.
The Portuguese Government had assumed that the economy would grow at a slower pace. The growth forecast by the IMF is now exactly the same level of the new estimate of the Government presented the proposal amending budget and is slightly below the 1.1% projected by the Bank of Portugal (expected this week to present an updated forecast) . For 2015, the fund maintained a growth forecast of 1.5%.
In relation to the balance with the outside, the impact of the weaker performance of Portuguese exports is also felt, having the IMF downloaded external surplus estimate for this year from 0.8% to 0.6% of GDP. In 2015, the same trend: from 1.2% to 0.8%.
Inflation zero
Another sign that the IMF sees an evolution of more moderate activity in Portugal is the fact that you anticipate a stagnation of prices in the country. The Fund now predicts that during 2014, the inflation rate becomes zero. In April, predicted 0.7%. The new IMF forecast compares with the 0.2% currently estimated by the Bank of Portugal.
The risk of deflation in the euro zone is one of the main concerns presented by the fund in its report. Following Greece, which anticipates a decline of 0.8% in prices, Portugal along with Cyprus is the country with the lowest inflation forecast for this year. Still, in its central scenario, the trust fund that, in 2015, with accelerating growth, the price variation in Portugal returns to more normal levels of 1.1%.
Where forecasts improved significantly compared with April was in the job market. The same way as the troika was surprised at the beginning of the program, with a rise in unemployment above the forecast, now fails successive forecasts for the descent of the same indicator.
Although economic growth is weaker than expected, the unemployment rate predicted by the IMF is now 14.2% in 2014 and 13.5% in 2015, a downward revision compared to previous projections of 15.7% and 15% respectively. For 2014, the Government is aiming for an amount equivalent to the IMF.
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