Portugal maintains 2022 deficit forecast despite first-half surplus


A person walks near Cais do Sodre during the national lockdown, amid the coronavirus disease (COVID-19) pandemic, in Lisbon, Portugal January 23, 2021. REUTERS/Pedro Nunes

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LISBON, Sept 23 (Reuters) – Portugal moved to a budget surplus of 0.8% of gross domestic product in the first half of 2022 from a deficit of 5.7% a year ago, the National Institute said on Friday. of Statistics (INE), although it left unchanged its deficit forecast for the whole of the year.

In an update of the country’s excessive deficit procedure reported to Brussels, the INE said the fiscal gap this year is expected to narrow to 1.9% of GDP – as the government forecast – from 2.9 % in 2021.

High inflation contributed to the first-half surplus, as did the continued economic recovery, with tax revenue up 20.7%, INE said.

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Portuguese inflation reached 9% year-on-year in August, according to the latest available data, more than double the 4% projected in the 2022 budget.

The INE said that in January-June this year, total revenue increased by 12.4%, while expenses fell by 3%.

With inflation weighing on private consumption, the economy lost momentum in the second quarter, but still grew 7.1% year-on-year, after growing 11.8% in the first quarter. trimester.

The Bank of Portugal expects the economy to grow by 6.3% this year.

Filipe Garcia, economist at Informacao de Mercados Financeiros consultants, said that “Portugal’s budget execution environment remains exceptional and likely unique” as strong growth and high inflation generate significant revenues from consumption, commodities energy and real estate.

At the same time, spending was planned at 2021 prices, amid low unemployment and debt interest is still at very low levels, he said.

He said 2023 “will be much more difficult in every respect and should require additional caution” from the government.

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Reporting by Sergio Goncalves; edited by Andrei Khalip and Catherine Evans

Our standards: The Thomson Reuters Trust Principles.


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