The Portuguese economy grew by 11. 9% year-on-year in the first quarter
Portugal posted a budget surplus of 1. 1 billion euros in the first part of 2022, up from a deficit of 7. 3 billion euros a year ago, as tax revenues soared thanks to a sharp economic expansion amid peak inflation, the government said on Wednesday.
Portugal’s economy grew by 11. 9% year-on-year in the first quarter, driven by the tourism sector, following a 4. 9% expansion last year while recovering from a pandemic-induced recession.
“The improvement in public accounts compared to the same time last year is strongly justified by the dynamism of economic activity,” the Finance Ministry said in a statement.
It said tax gains rose 28% to 25. 9 billion euros between January and June, driven by a 27% increase in profits from value-added tax (VAT) to more than 10 billion euros.
Since VAT is a tax on the final value of goods and services, your income automatically accrues in case of inflation.
Costs for Portuguese customers rose by 8. 7% year-on-year in June, their fastest rate since December 1992, with 8% in May.
The Finance Ministry said the government’s overall profits rose 20 to 46. 4 billion euros.
He said that public spending fell by 1. 7% to 45. 3 billion euros in the first six months of 2022, basically due to the decrease in spending on companies and families to combat the Covid-19 pandemic and the decrease in interest paid on public debt.
The government plans to bring the deficit to 1. 9% of gross domestic product this year, from 2. 8% in 2021.
Finance Minister Fernando Medina said Portugal would stick to its strategy of reducing its deficit and increasing its debt in the face of the European Central Bank’s (ECB) new rate hike cycle.
(Sergio Goncalves edited through Mark Heinrich)
Reuter