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The Portuguese Public Finance Council (CFP) publishes its Opinion on the Macroeconomic forecasts underlying 2016-2020 Stability Programme produced in line with the European rules and the Budgetary Framework Law (Law no. 151/2015 of 11 September) which states that the projections underlying the budgetary programming documents shall be based on the most likely macroeconomic scenario or on a more prudent scenario. Therefore, this Opinion covers the macroeconomic scenario underlying the 2016-2020 Stability Programme. Later the CFP will comment upon the Programme as a whole.
As a result of its assessment of the macroeconomic forecasts underlying the 2016-2020 Stability Programme’s draft, the Portuguese Public Finance Council concludes that:
1. The CFP already gave its opinion on the forecasts included in the scenario for 2016 on 21 January and 1 March 2016. The data available since then not only confirms but also increases the risks highlighted at the time.
2. The composition of aggregate demand growth based on the dynamics of investment and exports from 2017 onwards, if observed, is the more suitable for the Portuguese economy.
3. Over the forecasting period the CFP stresses the risks associated with:
a) the prudence of the assumptions regarding the evolution of external demand and the growth in exports in the medium run;
b) the fundamentals of the dynamics of investment.
4. The instability surrounding the Portuguese financial system carries a significant additional risk for the achieving of the macroeconomic scenario under examination.
5. The highlighted risks have consequences for the overall macroeconomic scenario and may require a revising of the expected fiscal outcomes. The greater risks concern the forecasts for the 2017-2020 period.
6. The perception of the forecast risks may be mitigated when the analysis of the macroeconomic scenario underlying the Stability Programme takes account of the full set of economic policy instruments aimed at the introduction of the structural reforms that the Portuguese economy still requires. Such analysis is especially relevant in the case of a document that is meant to define the fiscal policy stance for the life of the parliament. However, the Government has not provided the Portuguese Public Finance Council with the information required to take these into account.
Date of last update: 21/04/2016
