Regarding inflation, I initially shared an optimistic perspective based on recent reports indicating promising movements in key indicators. However, the latest December monthly data surprised positively for the Eurozone, UK, and USA, leading policymakers, investors, and analysts to question previous expectations of significant interest rate cuts this year.

Shifting attention to the relationship between wages and productivity, I highlighted that sustained wage increases require evidence of enhanced productivity and fiscal benefits. This interconnectedness is vital for sustaining real wages without inflation.

Furthermore, I explored three reasons to approach monetary tightening cautiously. First, the anticipated recovery in productivity may not immediately manifest in the data. Second, advancements in artificial intelligence, the transition to alternative energies, and shifts in labor patterns suggest potential improvements. Third, considering the social impact, real wage increases can moderate political attitudes and alleviate popular disillusionment with global capitalism.

Regardless, I find myself clinging to the same hope as last month. After all, productivity data has a lag, making it risky for central bankers to react too strongly to continued wage increases, declaring, for instance, a more restrictive monetary policy than they would in other scenarios.

These factors contribute to a scenario of waiting to assess Portugal's economic landscape in 2024.

In terms of other cyclical factors, three things stand. First, economic data from China and the performance of financial markets continue to disappoint overall, despite significant efforts by authorities to support a robust recovery.

Second, in the US, most economic indicators continue to outperform expectations. It's a relief, especially as many markets had a turbulent start to the year.

Finally, despite worrisome issues in the Middle East and Ukraine, the volatility of commodity prices has remained remarkably moderate. While there might be some strange technical factors of supply and demand at play, the relative stability is noticeable in many markets. Most key commodities and recognized commodity indices recorded declines compared to last year, providing a slight reassurance.

In conclusion, I leave you with these words: "It's time to roll up our sleeves and do something on a national level, not limiting ourselves to a scenario of waiting," allowing for a comprehensive assessment of Portugal's economic panorama in 2024.


Paulo Lopes is a multi-talent Portuguese citizen who made his Master of Economics in Switzerland and studied law at Lusófona in Lisbon - CEO of Casaiberia in Lisbon and Algarve.

Paulo Lopes