“As for Portugal’s economic situation, we expect a balanced budget this year and a deficit of 0.3% of GDP next year. Indeed, this differs from the government’s prediction of a surplus of 0.3% of GDP this year and 0.1% of GDP next year,” stated European Commissioner for Economy Valdis Dombrovskis.
Speaking at a press conference in Brussels on the day the European Commission released its economic growth projections, the European official explained that “what leads to this difference is due to the Commission’s more cautious estimates on expenditure growth, particularly current expenditure.”
Nevertheless, “it is worth noting that the Commission’s forecast for next year is still more optimistic than the Council of Public Finances, which predicts a deficit of 0.6% of GDP next year, and also the Bank of Portugal, which points to [a deficit] of 1.3% of GDP,” noted Valdis Dombrovskis.
The European Commission forecasts that Portugal will register a balanced budget this year and a deficit of 0.3% of GDP in 2026, according to projections released today.
Simultaneously, the EU executive estimated that the Portuguese economy would grow by 1.9% in 2025 and 2.2% in 2026, revising upwards the estimate for this year and maintaining next year’s projection.
During the press conference, Valdis Dombrovskis referred to the European Commission’s regular requests for the end of the discount on the Tax on Petroleum Products and Energy (ISP).
“Surely we are asking the government to withdraw such energy support measures that have been applied since the energy crisis following the war in Ukraine,” but “as of the cut-off date [for information gathering] for these Commission forecasts, the government had not yet announced the withdrawal of this measure, and therefore it is still considered in the forecasts,” explained the official.
At issue are discounts on ISP for gasoline and diesel, supports created in 2022 and 2023 following the energy crisis related to the war in Ukraine and high inflation.
Last week, Finance Minister Joaquim Miranda Sarmento said in Brussels that the European Commission “did not impose any date” and that it would be gradual.
The EU executive’s autumn forecasts are based on a set of technical assumptions about exchange rates, interest rates, and commodity prices, with a cut-off date of October 27.
For all other data, including assumptions about government policies, the projections consider information available until October 31.
Following criticism from Brussels, since 2023, the government will now gradually withdraw the ISP benefit, as announced during the state’s budget presentation for 2026.
This exercise arises from the European Commission’s recommendations to reduce these discounts, as they are exceptional measures aimed at alleviating the impact of rising fuel prices.
