October 10, 2019 / 12:20 PM / a month ago

UPDATE 1-Bank of Portugal forecasts lower growth as exports, consumption decline

(Adds details, background)

LISBON, Oct 10 (Reuters) - Portugal’s economy will likely expand a slower 2.0% this year, compared with 2.4% in 2018, due to a decline in export-oriented sectors, a fall in private sector consumption and an easing world economy, the central bank said on Thursday.

“(There will be) a continued expansion of the Portuguese economy for the sixth consecutive year but at a slower pace,” the Bank of Portugal said in its latest economic outlook.

Blaming the global economic slowdown, it said exports should only grow 2.3% this year, compared to 3.8% in 2018. But tourism and the automotive sector were likely to continue gaining market share.

Private consumption is expected to grow 2.3% this year, compared to 3.1% in 2018.

The most dynamic component of the economy is expected to be investment, estimated to increase 7.2% in 2019, up from 5.8% in 2018, supported in particular by the construction sector, with several large-scale infrastructure projects under way.

However, the bank also highlighted Portugal’s relative weakness in quality of management as a key obstacle to improving productivity, as well as a lack of qualified workers in growth sectors such as construction.

“It will be important to strengthen the attractiveness and capacity to retain young workers, who tend to be more qualified than older generations,” the bank said.

It added that a no-deal Brexit and “aggravated geopolitical tensions” would also add pressure on the country’s economy. (Reporting by Sergio Goncalves and Victoria Waldersee, writing by Catarina Demony; editing by John Stonestreet and Nick Macfie)

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