By Andrea Hargraves 
Regarding Portugal, the brokerage says that “households and companies have high levels of debt, which represents the risk of a stronger slowdown in consumption as well as the risk of default on debt obligations.”
As the end of the year approaches, XTB has developed an analysis of the economic and geopolitical context of several regions of the world, including Portugal, and has therefore prepared a forecast for 2024. Among the most relevant points of this analysis, the broker highlights that “from a macroeconomic point of view, although… The United States surprises on the positive side, but Europe is disappointing, as it has the worst scenario among the major economic regions.”
Can Europe escape recession? “While the US surprised on the positive side, Europe disappoints. Business activities, such as PMIs, show that the situation in Europe is indeed the most difficult among the major economic regions.
For Portugal, XTB predicts that next year “will certainly be a challenging year, with interest rates reaching their highest levels in 22 years.”
“Households and businesses are suffering from high levels of debt, which represents the risk of a stronger slowdown in consumption as well as the risk of default on debt obligations. At the same time, the country presented a budget aimed at having the highest tax burden ever, which could also lead to Removing more disposable income for families,” reveals the broker.
On the other hand, public accounts have improved significantly, with a significant reduction in public debt as a share of GDP and improvements in debt ratings in international markets. Therefore, forecasts for 2024 reveal that the improvement in the rating allows for a reduction in the burden of benefits paid by the state.
A global macroeconomic slowdown could affect Portuguese exports, potentially deteriorating the trade balance and weakening many small and medium-sized exporting companies. “On the other hand, we should pay attention to oil market prices, as they can have a direct impact on the development of inflation in the coming months,” writes XTB.
“We should also pay special attention to job development in the coming months, as it should provide more concrete evidence regarding the country’s direction. “Let’s see that if unemployment starts to rise, this could put all future data at risk,” he said. Adds the broker.
XTB notes that the IMF indicates a slowdown in economic growth in line with Greece and Spain for next year, setting itself at 1.5% and with respect to employment an increase to 6.5%.
He adds that the OECD expects the same growth rate for Portugal in 2024 and a worsening of the labor market to 7.5%.
At a global level, XTB highlights a range of different factors, “such as rising energy prices, the build-up of inventories following the Covid-19 pandemic and the gradual de-globalization, which has led to a profound decline in the manufacturing industry.”
“This weak situation seems to be leading the European continent towards an economic recession, the severity of which is still difficult to predict, due to various instability factors in the global situation,” says the broker, adding that “one thing seems to be that but it is certain that it is expected that… Inflation slows, mainly due to lower consumer demand.
XTB says that in 2024, “the geopolitical scenario should focus on the struggle for global hegemony between the United States and China, which have presented contradictory interests, which could lead to further friction over the coming year.” The case of China deserves special attention, because the economic situation of the second largest economy in the world appears to be much worse than expected.
Studying the EUR/USD pair “from a technical point of view, it is expected that the price declines recorded at the end of the last two years will resume in 2024, if the value continues to trade below 1.1280.” Along with this trend, the economic situation in Europe may put pressure on the European Central Bank sooner.
“Looking at Portugal, the decline in core inflation should continue, especially if declines in oil markets continue and if there is a slowdown in consumption, as is expected to happen,” say XTB analysts.
“There is also a high risk associated with households defaulting on debt obligations, for which savings rates remain low. It becomes even more worrying taking into account the state budget for 2024, which has already been approved,” says the broker, who expects an increase in the burden. Tax. He adds: “Interest rate cuts are scheduled to be in place beyond July 2024, indicating that families’ additional efforts will continue throughout next year.”
“From a general point of view, Portugal should see a slowdown in economic growth, to remain at 1.5%, as indicated by the IMF and OECD,” the report prepared by XTB said.
Henrique Tomé, analyst at XTB, is the author of some of the views presented in this analysis.