Portugal’s central bank cuts growth forecast in 2023 to 1.5% by Reuters

© Reuters. FILE PHOTO: A man walks with his dog in front of the Bank of Portugal in downtown Lisbon, Portugal on February 21, 2017. REUTERS/Raphael Marchant

LISBON (Reuters) – The Bank of Portugal on Friday cut its forecast for economic growth for 2023 to 1.5% from 2.6% forecast in June, predicting a sharp slowdown after expanding 6.8% this year, and is expected to weigh on inflation and higher interest rates. private consumption.

In its December Economic Bulletin, the central bank predicted that coordinated inflation in the eurozone in Portugal would slow in 2023, but remain at a high 5.8% after 8.1% this year.

Portugal’s coordinated inflation rate was 10.2% year-on-year in November, following a three-decade high of 10.6% recorded in October, driven by higher energy and food prices.

“Growth will be contained in the first half of 2023 amid global uncertainty, eroding purchasing power, tightening financial conditions and weak external demand,” the bank said in a statement.

From the second half of next year, activity is expected to pick up amid the prospect of “easing tensions in energy markets” and a gradual recovery in real income.

The central bank expects private consumption – which accounts for two-thirds of gross domestic product – to almost stagnate next year after rising 5.9% in 2022 as families struggle with rising inflation as well as rising interest rates.

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