Portugal Expects Economy to Continue Growing Above EU Average

(Bloomberg) -- Portugal’s economy will continue to grow above the European Union average, helped by the country’s ability to attract investment, Economy Minister Pedro Siza Vieira said.

“We’ve seen for the past eight quarters Portugal growing above the EU average and we expect this to continue,” Siza Vieira said on Thursday in a Bloomberg Television interview at the Web Summit in Lisbon. “Growth has been driven mostly by exports and investment.”

While the Portuguese government sees the economy expanding 2.2 percent in 2019, the European Commission forecasts a sharper slowdown to 1.8 percent growth next year. That would be slower than its projections for an expansion of 1.9 percent in the euro area and the EU. Tourism has helped fuel the recovery of the Portuguese economy, which last year posted the fastest growth since 2000.

Chinese investment, which also helped Portugal when it was going through an international bailout program in 2011-14, remains welcome, Siza Vieira said. In May, China Three Gorges Corp. offered 9.1 billion euros ($10.4 billion) to raise its stake in Portuguese utility EDP-Energias de Portugal SA, which would be this year’s biggest Chinese overseas acquisition, according to data compiled by Bloomberg.

“We are a country open to investment from all walks of the world,” said Siza Vieira. “It’s true that Chinese investment has been significant for the past few years and we welcome it.”

Other Chinese investments in the country include China State Grid’s 25 percent stake in energy grid operator REN-Redes Energeticas Nacionais SA. Fosun Group is the biggest shareholder in lender Banco Comercial Portugues SA with a 27 percent stake, and controls insurer Fidelidade. Chinese President Xi Jinping will visit Portugal on Dec. 4-5, according to Portuguese news agency Lusa.

Brexit Impact

Siza Vieira said the U.K.’s divorce from the EU isn’t “good news” for Portugal, He said there’s been a growing interest of both U.K.-based companies and U.K.-based individuals in moving to Portugal as the Brexit deadline approaches.

The split could trigger a drop of between 15 percent and 26 percent in Portugal’s exports to the U.K. in the medium-to-long term, a study by the Business Confederation of Portugal showed. It could also knock 0.5 percent to 1 percent off Portugal’s gross domestic product, according to the study.

“The U.K. is one of our main trading partners and its our first market for the export of services so the impact may be significant,” Siza Vieira said. “The British community has been growing over the past few years, but they have been residents in very significant numbers since the eighteenth century.”

©2018 Bloomberg L.P.