Portugal's Budget Surplus Declines

LISBON (Reuters) – Portugal posted a budget surplus of 1% of gross domestic product in the 12 months ended in September, down from a surplus of 1.2% a year earlier, according to the National Statistics Institute (INE).

In its quarterly update of public accounts data, the INE reported that public spending rose by 2.1%, outpacing revenue growth of 1.5%.

For the 12 months through the end of the second quarter, Portugal had a surplus of 1.3% of GDP.

Since taking over in April, Portugal's centre-right government has increased pensions and public sector wages while cutting some income taxes for the middle class, young people, and companies, in hopes of spurring growth.

The government anticipates a budget surplus of 0.4% of GDP for the entirety of this year, down from 1.2% in 2023. It expects the surplus to slightly decrease to 0.3% of GDP in 2025.

The Bank of Portugal predicts a budget gap of 0.6% this year, followed by a small deficit of 0.1% in 2025, primarily due to an increase in permanent net public expenditure.

The government expects the economy to grow by 1.8% this year and 2.1% in 2025.