The economy grows by 1.5% in 2019, below the government's forecasts

"We remain convinced that real GDP growth in Portugal will slow down during the year. We expect annual growth of the economy of 1.5%, below the estimate of 2.1% in 2018 and forecasts of 2.2% of the Ministry of Finance, "said the company in a statement.

Fitch Solutions believes that the slowdown of the national economy will be "expanded, with fewer private sector contributions and spending from the state as well as the external sector", but the company also pointed out that a "robust structural framework", thanks to a low level of unemployment, debt relief and a "prudent" fiscal policy will prevent a sharp slowdown in the economy. Therefore, "growth will remain well above the average of -0.1% from 2007 to 2016," said the agency's rating agency.

Fitch Solutions, however, stressed that it considers Portugal as "a high-risk economy, which could experience a greater slowdown in the event of a major shock in the euro area".

In the same note, the company pointed to "private consumption", which has recently made a significant contribution to GDP growth, but which should be reduced, due to the decline in consumer confidence, relative to peaks reached in the second quarter. 2017 and the first half of 2018.

In addition, said Fitch Solutions, a reduction in growth in the euro area, a tightening of monetary policy and a budget area "will maintain consumer confidence relatively moderate."

The shift to ultra-liberal monetary policy in recent years should also prompt Fitch Solutions to restrict lending to households, which has risen rapidly over the last 18 months, well above the general growth of the private sector.

The low unemployment rate and controlled inflation do not allow private consumption to fall "in style", but should calm down compared to the levels of 2017 and 2018, according to the same note, while she had experienced a average expansion of 2.2%. By the year 2019, it should be set at 1.5%, according to Fitch Solutions.

State spending will also slow in 2019, while maintaining budget revenues under the lens, given that GDP growth will be lower than the state budget forecast.

The company also identifies another risk: the increase in financing costs, which will eventually weigh on the amount the government could invest in the growth of the economy.

The slowdown in the external sector, given that Portuguese exports are mainly destined for the euro zone, including tourism, constitutes another obstacle for 2019.

Fitch Solutions recognizes that the structure of the Portuguese economy is better than it was ten years ago to withstand the impact of this cooling. "The Achilles heel is the huge weight of the public debt, which is the third largest in the euro zone, after Greece and Italy, with 124% of GDP at the end of 2017", added the company.

The note warns that with these levels of debt, any shock in Europe can have a "disproportionate impact on the Portuguese economy".