ISTANBUL 

Portugal's economy is expected to growth around 2% in 2024, and rebounding slightly to 2.25% in 2025, the International Monetary Fund said on Monday.

Economic growth is expected to be below 2% over the medium-term due to the country's aging population, low investment, and low productivity growth, the IMF said in its Staff Concluding Statement of the 2024 Article IV Mission.

Headline inflation is projected to fall to 2% next year, with core inflation also decreasing, according to the IMF.

"To balance growth and inflation objectives and further reduce debt, fiscal policy should aim at achieving a surplus in 2024 and stay broadly neutral thereafter," said the statement.

"For 2025, a broadly neutral fiscal stance, combined with the expected gradual loosening of the ECB’s monetary policy, will help achieve a soft landing of the economy. Any further relaxation of the fiscal stance would risk rekindling inflation," it added.

The IMF noted that Portugal achieved a large fiscal surplus last year, while public debt was reduced by 36 percentage points of GDP since 2020.

Portugal's economic growth in 2023 continued to exceed the euro area average, while inflation decelerated faster, it added.