NECEP - Catolica Lisbon Forecasting Lab - publishes its forecasts for the Portuguese economy today. The past few weeks of lockdown should drive a 5% drop in GDP in the first quarter of 2021 (or a 7% drop, when compared to the same period of time last year), together with the rise of the unemployment rate from 7.1% to 7.3%.
This drop in GDP, if confirmed, would be the largest on the record, ever since quarterly data has been kept, excluding the second quarter of last year. In any case, this drop is smaller than initially expected, as a result of a good performance from sectors such as industry, construction and some services.
As such, NECEP has revised its central growth scenario for 2021, setting it 3 points higher, at 1%. The Portuguese economy remains in a high-uncertainty environment associated with the evolution of the pandemic, the vaccine rollout and the lockdown measures that may, at some point, be strengthened over the course of the year. That is why one cannot rule out the possibility of a new GDP contraction after -7.6% in 2020, or an alternative growth scenario at the edge of 4%.
In the perspective of NECEP, the political, media and social landscape appears to be favourable to severe lockdowns should there be a significant deterioration of the daily health indicators for the pandemic, with the central growth scenario of GDP for 2021 reflecting the expected value of that effect. In the medium term, perspectives hold for a 4.5% GDP growth in 2022 and 3.5% in 2023, year in which the Portuguese economy should be back at 2019 levels.