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New crisis?  Alarms have already started to sound and pull out all sectors

New crisis? Alarms have already started to sound and pull out all sectors

Economic growth is slowing. This is one of the main effects of the war and Portugal is not oblivious to this trend. The bill is paid by both consumers and businesses. For Portugal and other distant countries, the main effects of the war were to reinforce the price shock of the last phase of the epidemic. What is now called “inflation” and the associated rise in interest rates are the main symptoms. Joao Cesar das Neves says to i.

But the state coffers thank you. And public administrations recorded, as of July, a budget surplus of 432 million euros, in public accounting, showing an improvement of 7,589 euros compared to the same months of 2021, a period still affected by the epidemic. However, compared to the first half of 2022, the cumulative balance decreased by 681 euros. According to the latest budget data, tax revenue and contribution increased by 17.2% compared to the same period in 2021 (an increase of 13.6% compared to the first seven months of 2019). Compared to June of this year, there was a change of 21.6%. This development is due to the contribution of tax revenues (21.1% compared to 2021 and 12.5% ​​compared to 2019), in particular the value-added tax refund (+24.7% compared to 2021 and + 16.5% compared to 2019). compared to 2019), as well as contributing revenue (+9.6% compared to 2021 and +16.2% compared to 2019), reflecting the economic recovery in recent months compared to the previous year.


Record-breaking inflation rate – According to the latest Eurostat data, year-on-year inflation rose in July to 8.9% in the Eurozone, compared to 8.6% in June of this year and 2.2% in July 2021. While in the European Union it reached 9.8% – seen as one of the main negative impacts on the Portuguese economy and beyond.

DECO calculations leave no doubt. Providing pantry has become more expensive since the start of the war in Ukraine, and at the moment, Portuguese families may have to pay €209.81 for a basket of basic foodstuffs, an increase of 14.26%. And the values ​​are rising. “A basket of basic foodstuffs costs €209.81 this week, 1.48% more than it cost just one week ago (August 17), and 14.26% more compared to what it cost on the eve of the explosion. The armed conflict in Ukraine (February 23) ”, says the organization.

Contributing to this increase, to a large extent, is the cost of fish and meat, that is, categories of food whose price has increased the most in the past six months. Between February 23 and August 24, the price of fish increased by 19.10% (plus 11.52 euros). To buy only one kilo of salmon, hake, mackerel, black shell, sea bass, bream, perch and cod, the consumer may now have to spend an average of 71.83 euros. The increase in meat was 17.14% (€5.53) in the past six months. When calculating on just one kilogram of sirloin, whole chicken, pork chops, pork chops, turkey steaks, veal for cooking and a turkey shake, the cost can now be, on average, €37.77, According to the Consumer Protection Organization.

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According to Paulo Rosa, chief economist at Banco Carregosa, inflation is the main negative impact on the Portuguese economy. However, he acknowledges that it could have been lower if the government had implemented an expansionary fiscal policy based on greater reduction in taxes on imported fossil fuels, and the abandonment of a larger portion of the ISP (Petroleum Products Tax), as well as value-added tax. , that is, which falls on hydrocarbons.

And do the math: ISP’s revenue from the Portuguese CEO rose 84.7 million in the first half of this year, compared to the same half in 2021, to 1,608.6 million. Also in the same semesters, the value-added tax rose by about 25% from 7920.7 million to 10052.3 million euros.

The economist also says that growing concerns about tightening gas supplies from Russia and approaching winter will continue to pressure inflation in the Eurozone and may force the European Central Bank (ECB) into further monetary contraction, based on higher – higher expected interest rates. “Given this scenario, the deterioration of the economic outlook in the eurozone is increasing. In this context, the difficulties faced by the national economy and the Portuguese government are exacerbated.”

And he does not hesitate: “Fighting inflation and its vices is more important for the ECB than avoiding a recession. Therefore, this central bank’s insistence will be increasingly evident, even if it causes a fairly deep recession. It is also true that a recession is a deflationary condition, increasing reduces unemployment, reduces disposable income, slows household spending, and ultimately relieves pressure on prices.”


Besides inflation, energy is also one of the other faces of the effects affecting all countries, so much so that yesterday, the President of the European Commission defended an “emergency intervention and structural reform” in the EU electricity market, recognizing the “constraints” of the current composition, which were exacerbated by the crisis. “Rising electricity prices are exposing the constraints on the current composition of our electricity market, [que] It was developed for different conditions. That is why we are now working on emergency intervention and structural reform of the electricity market,” revealed Ursula von der Leyen.

For Ricardo Evangelista, CEO of ActivTrades Europe, “high energy prices were the most obvious consequence of the invasion of Ukraine”.

XTB analyst Henrique Tomé also confirmed that energy products suffered from a price range, “adding to inflationary pressures that were already felt at the time”, with gas increases being more problematic, after EDP Comercial announced that it would increase the price of gas for families by an average of 30 euros per month – plus duties and taxes, which will equate to another five to seven euros in fees and taxes – and that Galp will follow suit, not revealing, however, what the value of that increase will be. Yesterday it was Goldenergy’s turn to move forward also in increasing the average price of gas to six euros for most customers, starting in October.

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In order to “dodge” these increases, families and small businesses will be able to access the regulated market for this energy. The regulated market prices will be less than half the prices of the suppliers who have announced their increase. We really believe that with this change many consumers will have a lower gas bill than the current bill,” the environment minister revealed.

According to Duarte Cordero, this measure will be valid for a maximum of 12 months and may cover up to 1.5 million customers. Another measure relates to the re-launch of the Belhar Solidarity Program, for which it mobilized funding from the Environment Fund, noting that “two weeks ago I imposed a maximum selling price for gas bottles, a measure that protects more than two million consumers.”

With regard to possible increases in energy and after the “war” with Endesa, which announced increases of about 40% and ended in a decline, after arguing with the government, the CEO considers that the Iberian mechanism has contributed to reducing the price of the wholesale market. [em Portugal]By reducing gas prices for electricity production,” the regulator advocated, allowing producers to sell electricity to suppliers, at lower values ​​than large European countries, such as Germany and France.


Oil was also one of the raw materials in which the increase in prices was felt. After the invasion, there was a rise in the value of a barrel of Brent, a European standard, which reached a maximum in March at $139.13. As of yesterday, we expect a rise of 11 cents in diesel to 1,887 euros, while the price of petrol should remain at 1,778 per liter. It is true that the values ​​are still benefiting from three mitigating measures implemented by the government which will be re-evaluated at the end of this month. The ISP’s deduction equated to a reduction in the VAT rate from 23% to 13%, and offset by the ISP’s cut in additional VAT revenue, and the suspension of the carbon tax update, reduced the fee by 28.2 cents on diesel and 32.1 cents on gasoline.

Real estate

The real estate market is not oblivious to this turmoil and it affects all consumers: not only those who have a home or who intend to buy, but also those who rent. In July, the European Central Bank (ECB) announced an interest rate increase of 50 basis points – instead of the initially planned 25 – that would penalize everyone with a loan to pay or those who are about to close business. This was the first rate hike in more than a decade, to try to stem the escalation of inflation, and everything indicates that the central bank should follow the same increase at the next meeting scheduled for September. This comes at a time when the US Federal Reserve (Fed) is making strides in raising interest rates.

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And for hire, the alarms sounded. The explanation is simple: contracts are indexed in excess of the average rate of inflation in the twelve months ending in July. The final value will be presented tomorrow, but there are those who indicate values ​​​​close to 5%. This means that landlords are free to ask their tenants for an increase in this order of values ​​from January 2023. A significant sum considering that this year rents have increased by only 0.43%.

The scenario that has already prompted the owners association to demand that the Portuguese government follow the example of Spain, which has imposed a cap of 2% on updating values ​​that will apply next year. For i, Romão Lavadinho has already confirmed that “7% or 8% increases in rents are completely unsustainable”. But for that, he advocates a rule published by the government that sets a maximum ascent ceiling.

The president of the National Association of Landlords has the opposite opinion when arguing that “the lease is celebrated and should only be respected”, ruling out the scenario of brake intervention in rent increases. He does not hesitate to point the finger at the executive branch: “This government has done nothing for seven years except to harass its owners.”

An opinion shared by the Lisbon Owners Association ensured that more than 30% of landlords in Portugal feared the possibility of an administrative freeze on rents due to high inflation (see page 11).


Trading in the market, in recent months, has been characterized by high volatility. The explanation is simple: fears of a global recession are weighing on investor sentiment. “The first half of the year was the worst in recent years, affected by the restrictive monetary policies adopted by the major central banks, combined with concerns about recession risks and also by the Russian invasion of Ukraine which took the markets by surprise and triggered strong declines in risk assets. ‘, says Henrique Tomé.

But, on the other hand, gold was one of the materials that recorded a rise, precisely because it was seen as a safe haven asset.