LISBON: Portugal's moderate economic recovery will persist in the next few years and the annual growth rate is likely to edge up gradually after this year's slowdown to reach 1.5 percent in 2018-2019, the Bank of Portugal said on Wednesday.
In its winter economic bulletin, the central bank revised this year's projected growth slightly higher to 1.2 percent - in line with the government's forecast - from its previous estimate of 1.1 percent thanks to better-than-expected export growth.
But it also trimmed the forecast for next year to 1.4 percent from 1.5 percent as it now expects a more moderate expansion of domestic demand. Portugal, which suffered from a debt crisis and was forced to impose painful austerity under an international bailout in 2010-13, emerged from its worst recession in decades in 2014, and growth last year reached 1.6 percent.
The economy has cooled off somewhat since, forcing the government to trim its growth expectations. Still, the centre-left government expects it to expand by 1.5 percent in 2017.
The central bank expects strong exports to be the main driver of growth, combined with a moderation of private consumption and recovery of investment, adding "these features are consistent with a more sustained growth pattern" and expecting further gradual improvements in the labour market.
Citing the temporary nature of euro-area economic stimuli such as record low interest rates and quantitative easing, however, the bank also called for deeper structural reforms to stimulate investment and innovation as well as for further fiscal consolidation to cut public debt in a sustained fashion.
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