Portugal to Raise Growth Forecast to Near 5% as Tourists Return
Portugal is likely to raise its economic growth forecast for this year to close to 5% as tourists help boost the recovery and Europe’s Covid-19 vaccination campaign advances.
The government sees gross domestic product expanding as much as one percentage point more than the 4% it forecast in April, Portuguese Finance Minister Joao Leao said in a Bloomberg Television interview in Lisbon. “We’re actually very optimistic.”
The Portuguese economy shrank 7.6% in 2020 as the coronavirus pandemic slammed the tourism industry and other businesses, the biggest annual contraction since at least 1960. For Portugal, which has the third-highest debt-to-GDP ratio in the euro area behind Greece and Italy, tourism represents about 15% of the economy and 9% of employment. The British rank as the biggest group of visitors.
U.K. tourists were allowed to enter Portugal starting May 17 with a negative Covid-19 test, ending months of pandemic-induced restrictions. Portugal was one of a handful of countries placed on Britain’s “green list” of destinations that don’t require a quarantine on return.
Portugal’s economy contracted in the first quarter after the country faced one of the world’s worst coronavirus outbreaks in January, forcing the government to implement strict confinement measures. The number of daily infections then eased in February and March.
“The vaccination program is working very well,” Leao said. “We’ve opened up already almost all of our economy and the number of cases remains very low. And now tourism is back.”
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