A Quick Overview of Key Portuguese Stocks in 2023

Stock markets are the heartbeat of any country’s economy as their performance is closely linked to the country’s economic performance in general. There are many stocks in Portugal but only a few of them showed significant movements. EDP, Greenvolt, and TAP Air Portugal in 2023 highlighted the diverse strength of the Portuguese economy, from renewable energy to tourism. While they were not on the list of the biggest stock gainers of all time, these stocks showed resilience and contributed significantly to the strengths of the Portuguese economy.

EDP Energias de Portugal SA (EDP.LS)

EDP is a leading Portuguese utility company. It significantly contributed to the Portuguese economy in 2023, as it operates across several renewable energy types including solar, wind, and hydroelectric power. Despite the turbulent global economic environment, EDP continued to focus on expanding its renewable energy portfolio. This focus supported both Portugal’s environmental goals and positioned EDP as a key player in the global transition to renewable energy.

Greenvolt - Altri SGPS (GVOLT.LS)

Greenvolt emerged as a notable company in Portugal in 2023 with the news of a full takeover bid by a unit of U.S. private equity fund KKR, which valued the firm at 1.16 billion euros. This development once more emphasized the global shift towards sustainable energy solutions. Greenvolt is involved in biomass, wind, and solar projects across Portugal, other European markets, and in the United States. It significantly contributes to Portugal's renewable energy sector.

TAP Air Portugal

TAP Air Portugal is a state-owned flagship carrier that played a crucial role in Portugal’s economy in 2023. The airline reported a 30% increase in passenger traffic in just the first half of the year signaling a robust recovery in Portugal’s tourism sector.

Portuguese Economy Highlights of 2023: A Year of Transition and Resilience

The shift from GDP growth to economic moderation was anticipated as global economic uncertainties, inflationary pressure, and rising interest rates heavily impacted consumer spending and confidence.

Growth Amidst Slowdown

Despite the slowdown, the economy of Portugal showed resilience. The National Statistics Institute and Reuters reported a modest, 0.2% GDP growth in the last quarter of 2022, a slight deceleration from the previous quarter. This slow but still growth was a testament to the country’s robust economic fundamentals solidified in previous years supported by tourism and domestic consumption. The economic growth was just 2.3% in 2023 as per the European Commission highlights. This slow growth was caused by the broader European and global economic slowdowns.

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Challenges on the Horizon

Rising inflation, nearing the three-decade high, and increasing interest rates began to squeeze household incomes, affecting consumer borrowing and spending, and creating multifaceted challenges. This scenario was amplified by the global economic environment fueled by uncertainty, potentially impacting key sectors such as exports and tourism. The IMF (International Monetary Fund) predicted these sentiments, projecting a growth deceleration to 2.6% in 2023, which was influenced by higher living costs and slower external demand growth.

A Sectoral View: Tourism and Beyond

Tourism is a cornerstone of the Portuguese economy as the sector generated a sales revenue of close to 33 billion dollars. As such, tourism remained a bright spot, continuing to support growth even as other sectors faced headwinds. The government and analysis alike pinned hopes on tourism to keep the economy afloat through turbulent times. Despite these positive expectations, the broader economic context understood the need for diversification and innovation across other sectors to ensure sustainable growth.

Looking Ahead: Projections and Expectations

The outlook for 2024 and beyond promises a gradual recovery and stabilization. The European Commission forecasts a slight uptick in GDP growth for 2024 to 1.2% and 1.8% in 2025, underpinned by a recovery in private consumption and investment. The country will need to effectively manage inflationary pressures, continuous rebounding of the tourism sector, and the steady implementation of the recovery and resilience plan to make these predictions a reality.