Banco de Portugal has pulled back from this year’s high inflation rate to 7.8%. The economy grows until the end of the year, but stops in 2023

The Bank of Portugal revised upwards by 1.9 percentage points (pp.) its inflation rate forecast for this year, to 7.8%, the highest value since 1993, reflecting increasing external pressures on prices.

In its October economic bulletin, released today, the Bank of Portugal (BdP) expects the harmonized CPI to reach 7.8% this year, Upward revision from 5.9% expected in Junebut still under the eurozone.

The regulator explains that inflationary pressures remain high in the second half of the year, despite some signs of relief, which, it estimates, will lead to the rate remaining above 9% in this period, reaching its peak in the third quarter (9.5%) and declining slightly towards the end of the year.

As for the economy, the Asian Development Bank has improved its growth prospects this year by 0.4 percentage points. to 6.7%, indicating a recovery from the pre-pandemic level in the first quarter, but a subsequent slowdown, which will reverse in 2023.

In its October economic bulletin, released today, the Mario Centeno-led institution only provides forecasts for this year, but notes the impact of the slowdown in economic growth recorded in the second quarter onward in 2023.

“The negative effects of Russian military aggression in Ukraine worsened throughout the year, indicating a relative stabilization of activity from the second quarter onwards. These effects will be more pronounced in 2023, with a significant slowdown expected compared to 2022, with an indirect impact of more than 3.9 parts of the page. [pontos percentuais] to 0.5 pages”, can be read.

However, this year’s growth forecast for GDP was revised down by 0.4 percentage points. compared to June to 6.7%, with “the Portuguese economy benefiting from the recovery of tourism and private consumption”.