(Bloomberg) -- The Bank of Portugal cut its forecast for the country’s economic growth for the next three years, citing a slower increase in exports and the impact of interest rate hikes.

  • Gross domestic product is now forecast to grow by 2.1% this year, followed by 1.5% in 2024 and 2.1% in 2025, according to the central bank’s October economic bulletin.
  • The central bank in June predicted expansion of 2.7%, 2.4% and 2.3% respectively.
  • “The transmission of interest rate increases to the financial conditions faced by families and companies will continue to limit activity in 2024 and 2025,” the Bank of Portugal said in the bulletin. The European Central Bank has carried out 10 consecutive hikes in borrowing costs.
  • The Bank of Portugal now sees exports rising 4.1% in 2023, down from a forecast of 7.8% in June. The unemployment rate is expected to drop to 6.5%.
  • The Bank of Portugal sees inflation at 5.4% in 2023 and 3.6% in 2024, slowing from 8.1% in 2022.

--With assistance from Henrique Almeida.

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