LISBON: Portugal’s economy will expand less than previously forecast in each of the three years through 2018 due to weaker growth in exports and investment, the country’s central bank said. Gross domestic product will increase 1.3 percent in 2016, 1.6 percent in 2017 and 1.5 percent in 2018, the Lisbon-based Bank of Portugal said in a statement on Wednesday. In March, the central bank forecast growth of 1.5 percent, 1.7 percent and 1.6 percent, respectively.
Prime Minister Antonio Costa’s government is more optimistic about economic prospects. Sworn in at the end of November, his minority Socialist government is reversing state salary cuts faster than the previous administration proposed, while increasing indirect taxes. It predicts growth of 1.8 percent this year.
Government spending will rise 1.1 percent in 2016, and private consumption will increase 2.1 percent. Investment will climb 0.1 percent, less than the March forecast for a 0.7 percent increase, the central bank said. Export growth will slow to 1.6 percent this year from 5.2 percent in 2015. Inflation is seen at 0.7 percent this year, before accelerating to 1.4 percent in 2017.