OECD is optimistic about Portugal’s growth and foresees a reduction in the tax burden

The OECD is optimistic about the growth of the Portuguese economy and the inflation rate, and also foresees a reduction in the tax burden in the country.

“Fiscal policy will become less restrictive”, states the Organization for Economic Cooperation and Development (OECD), in the economic projections report released this Thursday.

For this year, the organization predicts GDP growth of 1.6%, accelerating to 2% in 2025. Among the factors contributing to this forecast are the increase in public investment, the reduction in taxes and the increase in social benefits .

The organization’s forecast is more optimistic than that of the Portuguese Government and the European Commission, but it is the Bank of Portugal that sees growth more upwards.

In February, Finance Minister Fernando Medina stated that he believes that GDP could still grow 1.5% this year. Brussels, in its winter economic forecasts, said it expected Portuguese GDP to grow by 1.2% in 2024 and 1.8% in 2025. In its March forecast, the Bank of Portugal revised upwards the growth of the Portuguese economy to 2% , this year, and 2.3% the following year.

According to the organization’s forecasts, the inflation rate will be 2.4% this year and 2% in 2025, due to stable energy prices and the slowdown in job demand.

“A tight labor market and falling inflation are supporting real wage growth and private consumption, and the implementation of the Recovery and Resilience Plan (PRR) will boost investment.”

Regarding exports and investment, he says that they were held back by “modest global growth” and “high uncertainty”, but that the situation will change “as external demand” increases.

Forecasts point to a reduction in public debt from 99.1% in 2023 to 95.7% this year and to 92.5% the following year.