The Organization for Economic Co-operation and Development (OECD) forecasts national gross domestic product (GDP) to rise 5,4% this year, above government expectations, and sees inflation climbing to 6,3% .
In the report on global economic forecasts published today, the Paris-based body sees real GDP growing by 5,4% this year and 1,7% in 2023, due to "robust" public investments, driven by European Union funds, and the recovery of tourism. .
Although the OECD's outlook for this year is slightly more pessimistic than that of December, when it forecast GDP growth of 5,8% this year, it is more optimistic than that of the government and the Bank of Portugal. , which expect growth of 5,8% this year. year 4,9%.
The forecasts are still higher than those of the Public Finance Council (4,8%) and the International Monetary Fund (4%), being exceeded only by those of the European Commission (5,8%).
The OECD explains that strong growth in private consumption and the recovery in tourism supported GDP expansion at the start of 2022.
However, the pace of recovery is slowing, with heightened uncertainty due to the war in Ukraine, rising commodity and energy prices and falling real wages (due to inflation), indicating a expected decrease in pent-up demand and the impact of inflation on consumption.
The OECD also estimates that the Harmonized Index of Consumer Prices (HICP) will rise to 6,3% this year and 4% in 2023 and inflation to 5,3% this year and 3,9% next. .
The report also notes that strong nominal GDP growth will help reduce the public debt ratio to 120% this year and 116,7% in 2023, while the budget deficit is expected to fall to 1,5% this year and to 1,1% next year.
“Temporary fiscal support against high energy prices should target the most affected households and businesses,” stresses the OECD, noting that, for example, other types of financial support should replace the reduction of taxes on the fuels.
Among the aids, the OECD also suggests technical and financial support for low-income and vulnerable families, but viable businesses, such as building insulation, should increase, also encouraging the adoption of digital technologies and maintaining the government commitment to fiscal prudence. to reassure financial markets and limit rising funding costs as monetary policy normalizes.
“Given the high levels of public debt, maintaining a prudent fiscal policy and defining a credible medium-term fiscal consolidation plan will be essential to ensure favorable financing conditions,” he stresses.
The OECD also predicts that the unemployment rate will fall to 5,8% this year and 5,7% in 2023.
AAT // MSF