LISBON: The Bank of Portugal on Friday trimmed its 2016 economic growth estimate mainly due to declining investment, but said the country was still capable of meeting its budget deficit target of 2.5 percent of gross domestic product agreed with Brussels.
In its quarterly economic bulletin, the central bank said growth in 2016 should reach 1.1 percent, down from its previous estimate of 1.3 percent made in June.
Still, it improved its forecast for exports growth to 3 percent from 1.6 percent and said the economy should expand more in the second half after an anemic first six months of 2016.
Prime Minister Antonio Costa last week acknowledged the economy will grow slightly above 1 percent this year in a slowdown from 2015's 1.6 percent and below the original government forecast of 1.8 percent. But he insists the budget deficit will end the year below the 2.5 percent target.
"Evidence suggests that the deficit target set by the Council of the European Union for 2016 can be met ... although the budget implementation in the second half remains very demanding and subject to risk factors," the central bank said.
It expects gross fixed capital formation (GFCF), a measure of investment, to fall 1.8 percent this year, while in June it put the GFCF practically in line with last year's.
Private consumption is expected to rise 1.8 percent, lower than the previous estimate of 2.1 percent and down from last year's 2.6 percent in a disappointment to the government, which has been reversing austerity measures of the previous administration in the hope of boosting domestic demand.
The central bank did not update its growth forecast for next year, which it last put at 1.6 percent in June.
Comments
Comments are closed.