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The European Commission today highlighted Portugal’s “strong budgetary position”, with a surplus, which has shown a “positive evolution” in recent years, also not observing vulnerabilities regarding the country’s social convergence.
On the day the institution published its part of the autumn package of the European Semester, on the sidelines of the plenary session of the European Parliament in the French city of Strasbourg, European Commissioner for Economy and Productivity, Valdis Dombrovskis, stressed at a press conference that “Portugal is experiencing strong economic performance, as well as a strong budgetary position, with a surplus.”
“Our assessment, also in the context of the procedure relating to macroeconomic imbalances, is that Portugal is not experiencing macroeconomic imbalances and, in summary, from an economic point of view, we see a positive evolution,” added Valdis Dombrovskis.
The statements occur, however, days after the Bank of Portugal (BdP) estimated that the country will return to a deficit situation in 2025, with a deficit of 0.1% of the Gross Domestic Product (GDP), which contradicts the Government’s projections of a budget surplus.
In the State Budget for 2025, the Government estimates a surplus of 0.3% in 2025, and, according to the medium-term budgetary plan sent to Brussels, it also projects a positive budgetary balance until 2028.
In the forecasts of the Portuguese central bank, it is indicated that Portugal could register a deficit of 1% of GDP in 2026 and 0.9% in 2027.
Also today, within the framework of the autumn package of the European Semester, a report on employment in the European Union (EU) was published, in which the European executive considers that the effectiveness of Social Security in Portugal in alleviating poverty and income inequalities has deteriorated, referring to a “critical situation” as social support has not kept pace with rising prices.
“The effectiveness of the Portuguese social protection system in alleviating poverty risks and in reducing income inequalities has deteriorated. In 2023, the impact of social transfers – excluding pensions – in reducing poverty decreased by 3.9 percentage points, standing at 19.8% compared to 34.7% in the European Union, which indicates a ‘critical situation’,” the European executive points out.
Certainly, despite the warnings, “Portugal does not seem to face potential risks for upward social convergence,” assures the institution in the report.
This was also indicated by the executive vice president for Social Rights, Roxana Mînzatu, who told journalists at the press conference that she did not point out “any specific risks or vulnerabilities” regarding Portugal, further stating that she had already met with Portuguese ministers to discuss “future projects” in terms of labor mobility, skills, and social aspects.
The European Semester is an annual exercise of coordination of economic and social policies of the EU, in which member states align their budgets with the community-wide goals and rules.
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