State of the Environment Report

Macroeconomic Scenarios for Portugal in 2050

1. Introduction

The scenarios presented in this document were prepared by the Department of Foresight and Planning of the General Secretariat for the Environment. It is based on information available until November 30, 2021, as an update of the macroeconomic scenarios presented in the State of the Environment Report 2019 (APA, 2019), hereinafter abbreviated as REA 2019, for the period from 1995 to 2023.

The update that has just begun only intends to update the values from 1995 to 2020 and forecasts for 2021 until 2023. The current crisis that is being experienced due to the pandemic attributed to the Covid19 disease, creates uncertainties for the future that are still too dubious, which make it possible to describe heavy trends to a long future. We can thus present only paths to be followed in an uncertain future.

It should be noted that the figures presented do not have the character of forecasts, representing only possible patterns of evolution of the national economy, which are related, among other aspects, to the international framework, for which two are presented, relating to the world and the Union European.

2. Main differences with regard to the scenarios presented in the REA 2019

The scenarios now disclosed present several differences compared to those presented in REA 2019, which result from the following factors:

  • With regard to National Accounts, and given that there was a change from Base 2011 to Base 2016 of National Accounts prepared by INE, the values from 1995 to 2020 (year for which there is more recent data) were revised for the national macroeconomics variables;

  • Review of scenarios for GDP, private consumption, and employment growth for Portugal for the years 2021 to 2023. For this purpose, were considered the forecasts from the European Commission (Autumn 2021) and IMF (October 2021), the scenario for Portugal prepared by this General Secretariat for 2020 (Covid19-SG), as well as the most recent forecasts of several national entities such as the Ministry of Finance and the Council for Public Finance;

  • Updated population variables until 2020, namely the migration balance, live births, deaths and population, according to data available by INE, up to November 2021;

  • The scenarios for migratory balances were revised in view of the most recent estimates and the changes highlighted, for the years 2018 to 2020. The perspective of a gradual population reduction is maintained, taking into account the long-term scenarios carried out for the REA 2019;

  • Reviewed scenarios for Portuguese tourism imports and exports for the years 2021 to 2023. Given the particularity of the Pandemic, in which borders alternate between closed and open, considering that the effect would be identical for both imports and for tourism exports. For this purpose, simulations performed in the Covid19-SG scenario updated with the most recent forecasts for world GDP, EU27 GDP and Portuguese GDP were used;

  • Size changes of EU GDP to consider Brexit. This variable was revised and renamed EU27, to take into account the departure of the United Kingdom from the European Union;

  • The World and EU27 GDPs were revised for 2020 and 2023, to incorporate the most recent forecasts of both the European Commission and the IMF, thus embodying the international implications of Covid19;

  • Change of periods under analysis due to data availability. Thus, the first period is now from 2020 to 2024, the second period from 2025 to 2030 and finally the last period from 2031 to 2050.

3. Economic growth and demographic factors

As mentioned above and given that the revisions were limited to the years referring to the periods for which data were revised and for the years 2021 to 2023, in the long term there were no changes in heavy trends. Thus, the economic growth results from the combination of the evolution of the level of productive factors existing in the economy and the variation of the respective productivity.

We can consider that the scenarios presented here for the GDP in Portugal, in the 2050 horizon are relatively optimistic (even for the Low Scenario), given the demographic scenarios presented. These may constitute heavy trends that are very difficult to reverse except with very high levels of net inflows of immigrants (greater than those admitted in the scenarios presented here).

In international terms and because of the pandemic caused by SARS-cov2, there is a reduction in GDP growth rates both in the world and in the EU27 (see table 1), mainly for the period 2020 to 2024. Therefore, regarding the REA 2019, both world GDP and EU27 GDP show a loss at the level of GDP, reflecting a drop of 0.4 percentage points in its average growth between 2020 and 2024.


Table 1 – International Scenarios for GDP

(Average annual variation rates in volume)

 Observed (a)Low ScenarioHigh Scenario
EU 271,4%1,2%1,3%1,2%1,6%1,8%2,0%
World (B)3,7%2,6%2,6%2,1%3,0%3,2%3,0%

(A) Sources for observed rates of change: EU27: Eurostat (29/11/2021); World: IMF, World Economic Outlook Database; (B) In Purchasing Power Parities

The Table 2 presents two scenarios (High and Low) for the evolution of the Portuguese economy until 2050, regarding the main macroeconomic variables and the annual resident population (including the population: 15 to 64 years old).

Both demographic statistics and macroeconomic variables have as their starting point the year 2020 (the last year for which there are figures for demographic statistics and figures for the National Accounts – although is still preliminary).

Since the year 2020 and the years immediately after are atypical years, it was decided to create a period from 2020 to 2024. Since we have, on one hand, a break in 2020, derived from the measures of containment, we have, on the other hand, a growth above the average in the immediately subsequent years derived from a mathematical effect.

As Table 2 shows, the period from 2020 to 2024 presents an average growth for GDP of 0.6% and 1.2% for the low and high scenarios respectively, which contrasts with the REA 2019, which presented a growth of 1.5 and 2.2% for the low and high scenarios respectively and for the period 2018 to 2022.


Table 2 – Scenarios for Portugal


observed levels (a)

Average Annual variation rates in volume
Observedlow scenariohigh scenario
GDP at market prices203,90,70,61,10,71,22,02,0
Private consumption by residents132,00,80,91,10,71,52,02,0
Consumption by Residents outside the territory3,71,8-4,21,30,9-2,42,52,4
Consumption by Non-residents within the territory16,24,20,63,93,01,74,44,1
Private consumption within the territory144,51,11,01,41,11,62,32,3
Resident population (annual average)10,30,0-0,3-0,5-0,70,00,0-0,1
… of which, population from 15 to 64 years old6,6-0.2-0,7-1,0-1,5-0,5-0,6-0,8
PER CAPITA GDP19,80,70,91,61,51,22,12,2
EMPLOyment (b)4,7-0,1-0,1-1,0-1,50,5-0,6-0,8
Labor Productivity (b)42,10,80,82,12,30,72,62,8

Note: (a) Provisional values, at constant prices (base 2016). Units: billions of euros for GDP and consumption; thousands of euros per inhabitant for per capita GDP; millions of inhabitants to the population; millions of individuals to the Employment; thousands of euros employee for Labour Productivity. (b) Assuming that, for 2024-50, employment grows at the same rate as the population aged 15 to 64 years.

Sources for Observed Values: GDP and Consumption:  INE (values from 2000 to 2020): Quarterly National Accounts (29-05-2020); Quarterly and annual National Accounts updated to November 2021; Population: INE (values from 2000 to 2020) Resident Population Estimates (November 2021).

Thus, it appears that, the incorporation of a fall in the year 2020 because of Covid19, causes a significant fall in the level of GDP over a considerable period. In fact, while with the High Scenario, the GDP level is higher than that of 2019 in the year 2022, with the Low Scenario, the GDP level only becomes higher than that observed in 2019 in the year 2023.

The "Consumption of non-residents in the territory" and "Consumption of residents outside the territory" show a significant drop in the period 2020 to 2024. Indeed, tourism exports and imports are the most visible face of the effect of Covid19 disease with a significant impact. While in the high scenario these variables show a fall of 5.0 and 2.6% respectively, in the low scenario this fall is more significant, with falls of 5.7 and 3.3% respectively.


Chart 1 – Scenarios for GDP

GDP: 109 euros at 2016 prices


4. Methodology and assumptions considered in the scenarios

As these scenarios were not revised beyond 2023, this section presents the differences compared to the REA 2019.

4.1. International Scenarios

As for Portugal, two scenarios are considered (High and Low) for the GDP of the world and the European Union.

As for the world GDP, the years 2019 and 2020 were updated. The forecasts of the World Economic Outlook (October 2021) were used for the years 2021 to 2023, with variations of 5.9%, 4.9% and 3.6%, respectively as the central scenario.

Given the Brexit implementation and in the case of EU GDP, the GDP series had to be revised excluding the United Kingdom from this variable. Additionally, the European Commission's autumn forecasts were used to review the central scenario for the years 2020 to 2023 with variations of 5.0%, 4.3% and 2.5%, respectively.

4.2. Scenarios for Portugal

As for Portugal, the scenarios are presented for the following variables, considering the 2050 horizon:

  • Resident population (annual average);
  • Resident population, aged 15 to 64 (annual average);
  • Gross Domestic Product at market prices;
  • Private Consumption by residents (Families + Non-profit institutions serving families);
  • Consumption of Residents outside the economic territory;
  • Consumption of Non-Residents within the economic territory;
  • Private consumption in the economic territory;
  • GDP per capita.

4.2.1. Resident population

The values for the Resident Population for 2000 to 2020 are based on the Demographic Statistics of the National Institute of Statistics (INE).

The effects of Covid19 disease on the population are visible in the evolution of the physiological balance in 2020 and 2021 and in the evolution of the migratory balance. In fact, both in the number of deaths, due the increase in the mortality rate in 2020 and 2021, or in the migratory balance due to the effect of the pandemic in which bureaucratic legalization processes were lightened, allowed for different steps to exist for these variables.

4.2.2. GDP and Private Consumption of Residents

Until 2020, the most recent annual figures available from the National Accounts were used for these two variables, namely the Provisional Quarterly National Accounts for 2020 by INE and the preliminary Annual National Accounts for 2019, updated by the INE in September 2021 (INE, 2021).

In the preparation of scenarios for these variables and for the years 2021 to 2023, the forecasts and scenarios prepared for Portugal by various national and international institutions were considered, namely by the General Secretariat for the Environment (COVID19-SG), of the European Commission (2021), the OECD (2021) and the IMF (2021).

For the Low Scenario, an annual GDP growth of 3.7% for 2021, 4.9% for 2022 and 2.4% for 2023 was assumed. The figure for 2021 and 2022 is based on OECD forecasts, for 2023 in the Public Finance Council forecasts.

For the High Scenario, was assumed an annual GDP growth of 4.8% for 2021, 5.3% for 2022 and of 2.9% for 2023. The value for 2021 is based on the forecasts of Banco de Portugal and as for 2022 and 2023, in the forecasts of the European Commission.

As for Residents' Private Consumption, it was assumed that from 2021 onwards the growth rate of private consumption would be equal to the GDP growth rate for both scenarios. Knowing the high importance of consumption in the behaviour of GDP, the hypothesis of equal growth rates between these two variables seemed adequate.

4.2.3. Private consumption within the territory

Private Consumption Within the Territory (TC) is equal to the Private Consumption of Residents (CR), adding the Consumption in Portugal by Non-Residents (CNRT, also known as Tourism Exports) and subtracting Consumption by Residents, carried out abroad (CRE, also known as Tourism Imports).


Until 2020, the values for these variables were provided by INE.

For the years 2021 to 2023, a relationship between tourism growth and GDP growth was assumed. In the case of tourism exports, a relationship between the variation in this variable and the variation in world GDP was admitted, with a recovery time delay between 2021 and 2022, greater in the case of the low scenario. In the case of tourism imports, it was decided to relate this variable to the variation in national GDP.

The scenarios for Consumption in the Territory were then obtained by adding to the projected values for Resident Consumption, the scenario values for Tourism Exports and subtracting those for Tourism Imports, according to the equation presented above.


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November 30, 2021