Portugal's Growth on the Rise: Optimistic OECD Projections for 2024 and 2025

Portugal's growth on the rise, according to the latest revision of the Organisation for Economic Co-operation and Development (OECD). This report, which comes as an encouraging sign for the country's economy, raises the Gross Domestic Product (GDP) growth forecast to 1.6% in 2024. It also maintains a robust estimate of 2% for 2025 - this suggests a progressively positive economic outlook for Portugal.

 Public Investment and Tax Relief Boost the Economy

In fact, several factors contribute decisively to this optimistic outlook. Among them, public investment and tax relief stand out as the main drivers of growth. The Portuguese government has implemented policies aimed not only at boosting business investment, but also at increasing families' ability to consume. Through measures such as a reduction in personal income tax and extended subsidies for home loans and rents, there is a clear incentive to increase economic activity.

 Impact of Wage Policies and Social Benefits

In addition, the reinforcement of public salaries and the indexation of pension benefits appear as vital complements. These measures, together with new targeted social transfers, promise not only to improve citizens' quality of life. They also seek to stimulate the economy through consumption.

 Challenges on the horizon

However, the OECD economists also draw attention to some challenges. For example, rising labour costs could limit employment in low-wage sectors. In addition, large public investments and permanent tax cuts could intensify inflationary pressures. In this sense, it is essential that policies are well calibrated to balance growth and stability.

 Inflation Outlook and Budget Balance

With regard to inflation, a significant moderation is expected, with the rate projected to decrease to 2.4% in 2024 and 2.0% in 2025. This relief is expected mainly due to the stabilisation of energy prices and the slowdown in labour demand.

Finally, as far as the budget balance is concerned, it is expected to fall from 1.2% of GDP in 2023 to 0.3% in 2024. This development reflects prudent and effective budgetary management, in line with long-term strategies for reducing public debt, which is expected to fall below 931 T3T of GDP in 2025.

 Conclusion

In short, Portugal's growth is clearly on the rise, with encouraging projections for the coming years. The combination of strategic public investment policies, fiscal relief and budget management is creating an environment favourable to economic development. However, it is crucial to monitor the associated challenges to ensure that growth is sustainable and inclusive.

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