Lisbon, May 5, 2025 (Lusa) - The Portuguese minister of finance said on Monday that the nation's economy should be growing at around 3%, but the fall in GDP in the first quarter is not surprising, after the highest growth in the European Union (EU) in the fourth quarter of last year.
"The Portuguese economy should be growing close to 3%, with a potential GDP level also close to 3%," said the Minister of State and Finance, Joaquim Miranda Sarmento, who was the guest speaker at a lunch hosted by the International Club of Portugal in Lisbon.
The Portuguese economy grew 1.6% year-on-year in the first three months of the year and contracted 0.5% compared to the previous quarter, according to the flash estimate released on Friday by the National Statistics Institute (INE).
The government estimated in the state budget for 2025 a growth of 2.1% this year, but it should be noted that the outgoing Democratic Alliance governing coalition predicts, in the macroeconomic scenario outlined in the electoral programme, that GDP will grow by 2.4%.
"In the first quarter of 2025, preliminary figures from the INE indicate a fall in GDP, which should not, however, come as a great surprise," said the minister.
Miranda Sarmento pointed out that, excluding the first quarters of 2020 and 2022, periods of the Covid-19 pandemic and lockdowns, the Portuguese economy "had never grown as much in consecutive quarters as in the fourth quarter of 2024" since Portugal joined the eurozone, "and is now, in a way, stabilising within its medium and long-term outlook".
In response to a question from former Minister of the Economy Manuel Caldeira Cabral about the reasons for the fall in GDP, the Minister of Finance stressed that the final figures should be known at the end of the month, but highlighted the zero contribution of domestic demand in the first quarter, which, "despite everything, is still reasonable given the very high growth in the fourth quarter".
Miranda Sarmento also pointed to the likely slowdown in construction investment, as measured by INE through cement consumption, whose purchases grew by more than 20% in November and December.
In addition, the decline can be explained by the slowdown in private consumption, lower than expected growth in private investment, and growth in imports, which, according to the minister, may be related "to some anticipation of the effect of tariffs" by the US.
Joaquim Miranda Sarmento pointed to low productivity as the main brake on economic growth, leading to ‘very low’ levels of competitiveness.
The minister of finance, who took the opportunity to take stock of a year of government, stressed that the purpose of this government was "to increase productivity and, with that, to make the Portuguese economy grow more and, with this greater creation of wealth, allow higher wages and more tax revenue for a lower tax burden".
According to INE data, GDP in volume terms recorded a year-on-year change of 1.6% in the first quarter of 2025, after growth of 2.8% in the previous quarter.
In a quarter-on-quarter comparison with the fourth quarter of 2024, GDP fell by 0.5% in volume terms, after growth of 1.4% in the previous quarter.
Economists consulted by the Lusa news agency predicted a slowdown, but not as intense, in the growth of the Portuguese economy in the first quarter of the year, pointing to year-on-year GDP growth of between 2.4% and 2.8% in the first quarter and between 0.1% and 0.6% in the quarter-on-quarter comparison.
MPE/AYLS // AYLS
Lusa
