EU Upbeat About Portugal’s Growth

European Union Economic and Financial Affairs Commissioner Pierre Moscovici lauded Portugal on Tuesday for its economic and fiscal progress and said growth would probably exceed 2.5% this year in an acceleration from 1.4% in 2016.

“The progress that has been made is very impressive,” Moscovici told a news briefing during a visit to Lisbon, adding that he is “optimistic” about the country’s economy, Reuters reported.

He also said that Portugal’s strategy of tackling the financial sector’s massive bad loans, which the government said would not involve the use of public funds, was “ambitious and going in the right direction”.

The International Monetary Fund last month more than doubled its 2017 growth outlook for Portugal after the country’s “near-term outlook strengthened considerably”, thanks to rising investment and exports, it said.

In a report on a monitoring mission following the end of Portugal’s bailout in 2014, the IMF now predicts that gross domestic product will grow 2.5% this year, up from a forecast of 1.3% released in February.

The upgrade is similar to ones made by many official forecasters, who have sharply raised their growth assessments of the country in the past few weeks, partly due a rapid improvement in Portugal’s fiscal accounts.

The Bank of Portugal has also raised its growth outlook to 2.5% from a previous estimate of 1.8%.

The IMF said it now sees growth of 2% in 2018, up from its previous estimate of 1.2%. “Portugal’s near-term outlook has strengthened considerably, supported by a pick-up in investment and continued growth in exports, as recovery in the eurozone has gained momentum,” the IMF said. “Portugal has also made commendable progress in addressing near-term risks.”

The lender said a key improvement was Portugal’s reduction of its budget deficit, to 2% of GDP last year, the country’s lowest since the 1970s. Portugal’s goal to cut the deficit further to 1.5% of GDP this year “is well within reach,” the IMF said.

Portugal’s growth improvement has been boosted by tourism, which is set to generate double-digit revenue growth for the fourth year running in 2017, helping a rebound in the construction sector, the IMF said.