Healthy cooling on the eve of the budget
Economic activity in Portugal was disappointing in the second quarter and the labour market is showing signs of moderation. On the other hand, inflation is progressing at a good pace towards the target level, allowing households’ purchasing power to recover, but it also confirms that lower nominal economic growth seems guaranteed, for example by conditioning the condition of fiscal policy. On the external front, the signs point to a slowdown in growth, while the trajectory of inflation and wage restraint in Europe make room for a reduction in interest rates. It’s in this context that the new state budget for 2025 is being prepared, a framework in which some risks seem to be emerging that need to be taken into consideration, a topic we’ve covered in an article in this publication.