Portugal Says It’s Better Prepared to Face a Crisis This Winter

Henrique Almeida
·2 min read
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(Bloomberg) -- Portugal is better prepared to face the current economic challenges than it was during the euro area crisis more than a decade ago, when the southern European nation requested an international bailout.

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“Ten years ago our economy was in a recession and our debt was rising,” Economy Minister Antonio Costa Silva said in an interview in Lisbon. “Today we have exactly the opposite situation -- a growing economy and falling debt. But we can’t have any illusions: 2023 will be a very tough year.”

For now, Costa Silva said the government is keeping its 1.3% economic growth forecast for 2023. However, things can change rapidly as rising interest rates increase the likelihood of a recession in Europe, he said. The minister also cited an unprecedented global energy and geopolitical crisis triggered by the war in Ukraine as risks to growth. A cold snap this winter could further increase energy costs and threaten Portugal’s growth prospects, according to Costa Silva.

“We’re facing a completely different cycle marked by major geopolitical clashes, fragmentation of world trade, disruptions in logistics chains and high rates of inflation,” said Costa Silva, 69, who was previously chief executive officer of Partex Oil & Gas. “The situation is very volatile.”

Read more: Portugal Raised to BBB+ by Fitch on Narrowing Budget Deficit

Tourism, which accounts for about 15% of Portugal’s gross domestic product, will continue to be one of the country’s main growth drivers, he said. Revenue from the travel industry is expected to reach a record 20 billion euros ($20 billion) this year compared to 18 billion euros before the pandemic in 2019, Costa Silva said.

The minister also said growth is being driven by the country’s heavy industries, including the metal and mechanical sector, and exports of products including footwear. Portugal, which is hosting the Web Summit conference this week, is also discussing ways to attract more startups and technology companies. Costa Silva said there will soon be new legislation for the sector, without providing more details.

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