Portugal’s inflation rate has shown signs of decline, settling at 2.4% for 2024, a significant drop from the previous year’s 4.3%. However, the year ended with a spike in inflation to 3.0% in December, raising concerns about future economic stability. Meanwhile, the government is optimistic about economic growth, projecting a 2.1% increase in GDP for 2025, bolstered by positive indicators from the fourth quarter of 2024.
Inflation Trends in Portugal
The National Statistics Institute (INE) reported that the average annual inflation rate in Portugal for 2024 was 2.4%. This figure reflects a notable stabilization compared to the previous year. The inflation rate fluctuated throughout the year, reaching a low of 1.9% in August and peaking at 3.0% in December.
- Monthly Inflation Rates for 2024:
- January: 2.1%
- February: 2.3%
- March: 2.5%
- April: 2.2%
- May: 2.0%
- June: 2.1%
- July: 2.0%
- August: 1.9%
- September: 2.1%
- October: 2.3%
- November: 2.5%
- December: 3.0%
The underlying inflation, which excludes volatile food and energy prices, also decreased to 2.5% in 2024 from 5.0% in 2023. This trend indicates a broader stabilization in consumer prices, although the December spike raises questions about future inflationary pressures.
Economic Growth Outlook
There is continued confidence in the potential for Portugal’s economic growth, with provisional indicators suggesting an acceleration in the fourth quarter of 2024. The government has said it expects GDP growth to reach 1.8% for the year, with a more optimistic forecast of 2.1% for 2025.
- Key Economic Indicators:
- 2024 GDP Growth: 1.8%
- Projected 2025 GDP Growth: 2.1%
- Budget Surplus for 2025: 0.3% of GDP
Despite external uncertainties, including geopolitical tensions and economic challenges in major economies like Germany, the indicators point to a robust economic performance. It is also anticipated that there will be another budget surplus, reflecting a positive fiscal outlook for the country.
Conclusion
As Portugal navigates the complexities of inflation and economic growth, the recent data presents a mixed picture. While inflation has decreased overall, the December spike raises concerns. However, the government’s optimistic growth projections for 2025 suggest a resilient economy poised to overcome external challenges.
