Credit ratings agency Moody’s said that the public sector budget deficit should continue to shrink as a proportion of gross domestic product this year, to “close to 3%”, but that this has been thanks above all, to economic growth, rather than the implementation of structural measures aimed at reducing state spending in the medium to long term.
Moody’s currently rates Portugal’s sovereign debt as Ba1, also known as “junk”, but while junk cannot be seen as entirely positive, there was some good news, as Moody’s claims the rate is stable and that Portugal’s debt is expected to start to drop to 125% of GDP at the end of 2016, from a peak of 130.2% last year.
The secretary-general of the Organisation for Economic Cooperation and Development (OECD) also confirmed a positive outlook and that he expected Portugal’s economy to grow by between 1.3% and 1.5% this year.
But again, this was not due to reforms in the country but instead thanks to lower oil prices and interest rates, and the weaker euro.
“Growth in gross domestic product reached 0.9% in 2014, and we expect it to reach, at least, between 1.3% and 1.5% in 2015 and continue this progression closer to 2% in 2016,” Ángel Gurría said at an event in Lisbon to present the ‘OECD Skills Strategy Diagnostic Report’ for Portugal.