Plan 2020/2030: Fall of the Portuguese economy in 2020 may reach 12%

The Portuguese economy could fall 12% in 2020, a drop much higher than the 6,9% predicted by the Government, according to the preliminary version of the economic recovery plan prepared by the executive's consultant, António Costa Silva.

Cristina Bernardo

In a 120-page document, entitled “Strategic Vision for Portugal 2020-2030 economic and social recovery plan”, António Costa Silva leaves the warning in the second paragraph of the document: it is not worth having “illusions”.

"The health crisis caused by the Covid-19 disease brings with it a deep economic recession that has global characteristics and that will deeply hurt our economy", warns the author.

António Costa Silva recalls that the forecasts for the Portuguese and world economy have been revised and adds that Portugal "may face one of the worst crises in its history" and that "the fall in GDP [Gross Domestic Product] in 2020 may reach 12%. ”

A figure that is much higher than the recession predicted by the Government in the Supplementary Budget recently approved by the Assembly of the Republic and that predicted a drop in GDP of 6,9%, but which the executive also admits to review.

“Given the current uncertainty, we are not going to update our macroeconomic projections, which we will update in due course of economic developments,” Finance Minister João Leão said on Thursday in a statement to Lusa.

To justify the steep decline in the economy, António Costa Silva predicts that consumption may drop by 11% in 2020, investment by 26% and admits that the unemployment rate may reach 11,5%.

“The dimension of the challenge is huge and the need for answers is urgent”, reads the document.

António Costa Silva also warns that “as of September 2020, the situation of many companies can deteriorate significantly and it is essential to have an aggressive program on the ground to prevent the collapse of profitable companies.”

Another factor highlighted by the Government consultant is the time that will mediate between “the significant deterioration of the economy in the second half of 2020” and the arrival of European aid next year.

"It can be fatal for many companies if there are no adequate responses," he warns.

In early June, the Government confirmed that António Costa e Silva had been invited to coordinate the preparation of the economic recovery program and that it had accepted this invitation “as a civic and 'pro bono' contribution”.

According to the Government, the objective was that the preparatory work was completed when the Government approved the Supplementary Budget, when the Minister of State, Economy and Digital Transition, Pedro Siza Vieira, would assume the “direction of the elaboration of the recovery program. ”.

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