Finance Minister confident of 2.5% growth in 2025

The Portuguese economy is expected to grow 2.5% in 2025 “if it does not suffer any external economic shock”, revealed the Minister of Finance, Joaquim Miranda Sarmento, at an event on Tuesday night in London.

“Economic growth since the pandemic has been one of the highest in the eurozone at European level,” he said during a dinner promoted by the Portuguese Center for Studies (CPE).

The most recent estimate from the National Statistics Institute (INE) points to 1.9% growth in Gross Domestic Product (GDP) in 2024, but the minister highlighted that “the last quarter was exceptionally good” .

“Our official forecast remains at 2.1%. However, with the growth we expected in October, when we presented the budget to Parliament, and now with this carry over of 1.3% (of GDP), we will have 2.5% real growth (of GDP). That is our expectation, if no external economic shock affects us”, he explained.

Joaquim Miranda Sarmento was speaking during a dinner where he was the guest of a group of mostly Portuguese people who make up the CPE, several of whom work in financial institutions, such as the president of the insurance company Legal & General, António Simões.

According to the Portuguese minister, “the results exceeded expectations in 2024: more growth than initially predicted, less employment, a higher budget surplus, less debt and less inflation than expected”.

“Looking at the Portuguese economy, even if there is a recession next year, we will remain below the 3% (budget) deficit in terms of GDP”, he assured.

Miranda Sarmento welcomed the fact that the main rating agencies are currently making a positive assessment of Portuguese public debt, which has reduced interest rates on treasury bonds.

This situation contrasts with the “junk” classification, i.e. high risk, during the sovereign debt crisis during much of the 2010s.

In January, the financial rating agency DBRS decided to upgrade Portugal's rating to 'A' (high).

On Friday, it will be S&P's turn to make a statement, followed by Fitch on March 14 and Moody's on May 16, according to the calendars published by the agencies.

“I wouldn’t be surprised if S&P also raised our rating on Friday,” the minister said.

Despite the “good news in this uncertain international environment”, the minister acknowledged that Portugal continues to face “problems and difficulties” , referring, among other issues, to low productivity and the need to modernize public administration .