“The surprise negative turn in third quarter gross domestic product and the weakening in the economic drivers, both internal and external, led us to review our growth forecast for the year downwards,” the Spanish bank reported before adding that it expected growth in the final quarter to come in at 0.2% up on the third quarter and representing “stagnation in the second half of the year.”


This 1.5% forecast thus comes in below that of the outgoing Portuguese government that saw 2015 turning in growth of 1.6%.
“Internal demand remains the main motor of growth even while any extension of the political uncertainty may jeopardise its recovery,” said the BBVA.


Indeed, the report was more explicit in attributing this slowing pace of growth to both a downturn in the global environment and the national political context of an interim administration as “the main underlying factors to growth remain in place (low raw material prices, an accommodative monetary policy, the lack of fiscal adjustment).”


Stating that this domestic uncertainty coupled with lower paces of export growth due to the prevailing international context would offset the effects of a weaker Europe and leave Portuguese economic growth floundering into 2016 with BBVA now foreseeing growth of but 1.3% next year, down from an earlier forecast of 2%.


Indeed, the report makes grim reading for economic optimists with the BBVA number crunchers pointing to the national deficit closing this year on 3.1% and not only substantially above the government’s target of 2.7% but also preventing the country from exiting the European Union’s Excessive Deficit Procedures.