Fitch highlights, in a commentary associated with the assessment, the reduction of the budget deficit to 0.4% of Gross Domestic Product (GDP) in 2022, but forecasts that it will rise to 1.2% this year, due to a reduction in tax revenue, rising spending and a “weakened” economy, before falling back in 2024.
The reduction in the public debt-to-GDP ratio is also highlighted by the US agency, which forecasts that it will fall from 113.9% in 2022 to 109.1% this year and to 105.4% in 2024.
"Despite this downward trend, government debt remains the second highest in the 'BBB' rating category and our projection for 2024 is almost twice the median of the category (around 56%)".
Despite expecting weaker growth in the first half of this year, he believes in a recovery of activity from the second half, supported by public investment, with a faster execution of European funds and the improvement of economic prospects in Portugal's main trading partners.
In this way, it revises upwards the Portuguese GDP growth forecast from 1% to 1.3% this year, expecting a rate of 2.4% in 2024.
It also predicts that inflation will drop “sharply” due to the reduction in energy prices and reach 5.5% this year, before falling to 2.9% in 2024.