The projections for the Portuguese economy are surrounded by a high level of uncertainty, reflecting recent domestic developments, which adds to the demanding and necessary implementation of the economic and financial assistance programme.
In a context of high uncertainty, the risks associated with the projection for economic activity are balanced for 2013 and on the downside for 2014. These risks reflect the possibility of a higher than projected contraction in private consumption induced by the announced fiscal policy measures, as well as the possibility of a less favourable evolution of exports. The risks for inflation are slightly on the downside, reflecting the possibility of a lower than projected increase in profit margins, in a context of depressed domestic demand.
The current projection implies an upward revision of 0.3 pp in GDP growth in 2013 compared with the spring edition of the Economic Bulletin, which mainly reflects a more favourable evolution of exports of goods. In turn, the projection for 2014 is revised downwards by 0.8 pp, reflecting mainly the impact of the incorporation of fiscal consolidation measures. This impact is partially compensated by a stronger increase in exports, as well as a lower disaccumulation of stocks over the projection horizon. The projection for inflation in 2013 and 2014 was revised downwards by 0.3 pp and 0.2 pp, respectively, reflecting a lower increase in unit labour costs in the private sector and in the imports deflator in 2013.
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