Portugal

Portugal: successful recovery from the crisis

Portugal’s economic performance has been improving in the past few years, with the EPI score projected to be around 86.2%, or a C level, in 2015, a large improvement from the crisis level of 70% just a few years ago.

GDP growth turned positive in 2014 after a few years of recession and is projected to accelerate to 1.5% in 2016.  Portugal successfully graduated from the European Union-International Monetary Fund bail-out program in mid-2014 and has been repaying funds to its international creditors ahead of schedule. Sovereign debt reached its peak level of 130% of GDP in 2014 and is projected to start falling in 2016, once the government repays its creditors.

The 5-Minute Economist projects Portugal’s economic performance to continue improving gradually but still to remain poor, with the EPI score reaching 87% by 2020, supported by a falling unemployment rate and modest GDP growth of about 1.5%. Portugal only partially benefited from lower oil prices in 2015, with food prices not falling as much as in other EU countries. Inflation is likely to start picking up, once deflationary effects of lower energy prices fade out. The budget deficit is projected to stay below 3%, in line with the European Union norms.