Competitiveness Forum anticipates technical recession in first quarter due to confinement

The institution chaired by Pedro Ferraz da Costa admits that there is a "serious risk" that the summer will not have a "clear recovery" in the tourism sector, which will have negative repercussions on other economic activities and on the unemployment rate.

Mário Cruz / EPA / EFE

The Competitiveness Forum predicts that this year's confinements and Portugal's epidemiological situation will lead to a further contraction of the Gross Domestic Product (GDP) in the first quarter, creating the so-called "technical recession" (two quarters followed by falls) .

The director of the studies office of the Forum for Competitiveness, Pedro Braz Teixeira, believes that this scenario is due to the “new confinements of 2021, whose end is still very difficult to predict, the extremely high values ​​of new cases of Covid-10 and deaths ”, as well as fears about vaccine delays.

In the third quarter of last year, the Portuguese economy fell by 5,7% compared to the same period in 2019 "largely" because of the behavior of domestic demand, according to data from the National Institute of Statistics (INE).

In the report nº 12 of the Business Perspectives, for the fourth quarter of 2020, the institution chaired by Pedro Ferraz da Costa admits that there is a “serious risk” of the summer not having a “clear recovery” of the tourism sector, which will have negative repercussions on other economic activities and on the unemployment rate. “There are many companies dependent on this recovery that, if it does not materialize, are able to produce severe damage”, he warns.

Even so, the forum highlights the recovery of exports, citing INE data that point to a nominal growth of 4,9% of its exports in 2021.

In the same document, the CEO and chairman of the board of directors of Efacec warns of the importance of “predictability” in management, “so that the implementation of strategies is solid in the short, medium and long term”. “We are facing one of the most unstable situations in recent decades, with the certainty that the economic and social impacts of the pandemic will be reflected at least throughout the year 2021”, he begins by explaining.

“Given this, it is essential to have a strong capacity for adaptation and adjustment, coupled with a great capacity for resilience, at the same time that we will have to develop new skills and greater competitiveness. It is in this context that exports gain an even more relevant role for our country ”, explains Ângelo Ramalho.

Forum for Competitiveness anticipates GDP recovery between 1% and 4% in 2021

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