Portugal’s economy recovering well, may beat 2021 forecast, minister says

FILE PHOTO: Portugal's Economy minister Pedro Siza Vieira speaks during an interview with Reuters in Lisbon
FILE PHOTO: Portugal's Economy minister Pedro Siza Vieira speaks during an interview with Reuters in Lisbon, Portugal January 16, 2019. Picture taken January 16, 2019. REUTERS/Rafael Marchante/File Photo

May 25, 2021

By Sergio Goncalves

LISBON (Reuters) – Portugal’s economic recovery has been fast and strong since it started easing its COVID-19 lockdown in mid-March, and growth this year may exceed the government’s forecast of 4%, its Economy Minister said on Tuesday.

The corporate sector’s fortunes are also picking up, Pedro Siza Vieira told Reuters.

“Exports are growing, consumption and investment are reacting very significantly and jobs are being created since April,” he said in a telephone interview.

The economy slumped 7.6% last year, and in mid-January Portugal imposed a strict lockdown, its second since the pandemic began, due to what was then the world’s worst surge in COVID-19 cases and deaths.

Most restrictions have since been progressively lifted, and the government predicted last month the economy would grow 4% in 2021.

“Right now, we are envisaging more favourable growth,” Siza Vieira said, pointing to an ongoing resumption of tourism as a significant additional factor.

Tourism accounted for nearly 15% of gross domestic product before the pandemic, but foreign visitors dropped 76% last year, and arrivals were again impacted by January’s lockdown in the first quarter.

Now Siza Vieira expects Portugal to benefit from the return of British tourists – its main source market – after London put the country on its unrestricted “green” travel list from May 17, and the resumption of air travel with other European countries with low infection rates.

Portugal will maintain its pre-pandemic goal of reaching over 27 billion euros ($33 billion) in annual tourism revenues in 2027, Siza Vieira said, predicting an improvement to over 9 billion euros this year after a 58% drop to 7.8 billion last year.

A new 6-billion-euro package of state guarantees for loan restructurings and capital injections will start supporting the tourism sector in coming weeks, he added.

($1 = 0.8161 euros)

(Reporting by Sergio Goncalves; editing by Andrei Khalip and John Stonestreet)