Portugal’s vulnerabilities related to its high level of indebtedness continue to diminish, the European Commission said today in its assessment of macroeconomic imbalances in the context of the European Semester.
In the document, published today, the EU executive concludes that “vulnerabilities related to the high level of public, private and external indebtedness continue to diminish”, with public and private debt ratios “decreasing at a rapid pace”, falling well below historical peaks.
The report also points out that “political progress has been made in response to the vulnerabilities identified, with particular emphasis on mitigating the risks arising from rising interest rates”.
Brussels also points out that, in 2023, Portugal’s external sustainability indicators have “improved substantially”, with the current account recording a surplus.
However, the assessment points out that “the risks to Portugal’s fiscal sustainability are considered high in the medium term and low in the short and long term”.
The European Commission expects the country’s private, public and external indebtedness to continue its favorable trajectory, supported by economic growth, with domestic demand continuing to benefit from the grants and loans of the Recovery and Resilience Plan (RRP).
The main risks “refer to the uncertain external environment and its potential impact on Portugal’s economic growth,” it is also pointed out.
The final assessment on the existence of macroeconomic imbalances in the 12 member states subject to in-depth analysis will be presented as part of the spring package of the European Semester in June, along with specific recommendations for each country.
