Portugal’s Economic Resilience and Positive Outlook

Portugal's economic trajectory remains strong, supported by an upgrade in its financial outlook. Fitch Ratings has maintained Portugal’s credit rating at 'A-', with a revised outlook from stable to positive. This reflects the country’s ongoing efforts to reduce public debt and maintain a prudent fiscal policy.

Fitch estimates that Portugal’s public debt will decrease to 95.8% of GDP by the end of 2024, down from 99.1% in 2023. Economic growth is expected to be moderate, with a small budget surplus of 0.2% of GDP.

Despite a slight increase in the unemployment rate to 6.6% in 2024, a reduction is forecasted to 6.4% by 2025-2026, further solidifying the country’s economic stability.

This positive shift highlights Portugal’s ability to maintain economic progress even amidst global uncertainty, positioning the country as a prime destination for investment.

Fiscal Discipline and Reduced Public Debt

Fitch praised Portugal’s commitment to reducing its public debt, which has been a cornerstone of the country’s recovery. A year ago, the agency upgraded Portugal’s rating from 'BBB+' to 'A-', and with continued debt reduction, the nation’s vulnerabilities are lessened. Fitch points to Portugal’s external deleveraging and strong budgetary policies as key factors contributing to this improvement.

Stable Growth and Employment Prospects

Fitch anticipates moderate economic growth moving forward, fueled by robust sectors like tourism, exports, and foreign investment. Additionally, Portugal is expected to maintain a modest budget surplus, enhancing its fiscal resilience. Employment figures will see a temporary uptick in unemployment to 6.6%, but this is projected to fall to 6.4% by 2025, reflecting a stable job market and strong economic fundamentals.

Portugal's improving financial position and positive economic outlook reflect the country's careful management of its economy. The stable and attractive environment makes it a prime destination for investors, with Fitch’s positive outlook reinforcing confidence in the future.

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