The Bank of Portugal on Wednesday lowered its economic growth outlook for this year to 2.1% from 2.7% it predicted in June, citing a slowing export growth, stubbornly high inflation and restrictive monetary policy.
It sees exports growing by only 4.1% this year, much less than the 17.4% growth registered in 2022 and down from its previous forecast of 7.8% given the foreseeable strong slowdown or even recession in some of Portugal's key European trading partners.
It then expects the economy to expand by 1.5% in 2024 and 2.1% in 2025, also below its June estimates.
In its quarterly economic bulletin, the Bank of Portugal said economic activity had stagnated in the second and third quarters and "is expected to maintain low growth until the end of the year".
The economy grew 6.8% in 2022 - its strongest pace in 35 years.
Private consumption, which represents around two-thirds of GDP, is seen growing just 1.0% this year after 5.6% in 2022, as inflation and rising interest rates are hitting families hard. (Reporting by Sergio Goncalves; editing by Andrei Khalip)