The National Institute of Statistics (INE) will proceed in March with a revision of Portuguese gross domestic product (GDP), which may affect public debt and its ratio as a percentage of GDP. This revision stems from population growth, although the Government cannot base itself on it to construct the State Budget for 2027, which will be presented in October.
Economist João Borges Assunção, from the Catholic University of Lisbon, considers that the revision "does not change the essentials," as a debt of 85% would continue to be high, but argues that combined with maintaining the debt reduction strategy, it can be "a protection" in a context of rising interest rates in the eurozone. The former economic advisor to Cavaco Silva states that Portugal, with a smaller debt and deficit than France, Italy, Greece, and Spain, is more protected, and that a revision that helps reduce debt as a percentage of GDP can be "rewarded by markets in terms of spreads relative to Germany."
Economist Óscar Afonso, from the University of Porto, warns that "arithmetically" the upward revision of nominal GDP reduces the debt-to-GDP ratio, but "the debt does not disappear because the denominator was revised," as the State owes the same euros. He emphasizes that "a statistical improvement in the ratio should not be confused with effective fiscal consolidation," as debt sustainability depends on the capacity to generate adequate primary surpluses, economic growth, and financing costs.
Regarding the preparation of the Budget without the new GDP figures, both economists consider it prudent to construct the document based on available information. The INE, which has been discreet on the matter, wrote in a methodological note that no relevant changes are expected in GDP growth rates for 2025 and 2026, given that the population level revision reached its maximum in 2024.
