These are challenges related to a variety of factors taking place at the same time, including the evolution of long-term and short-term interest rates, the implications of the devastating war in Ukraine and the implementation of regulations and guidelines by the European Commission concerning its Green Deal. These three issues are not the only ones the sector will be facing, but their interconnection cannot be overlooked so as to know what to expect for the next few years. Each of these challenges deserves a more detailed analysis, which is beyond the scope of this text.
The central banks’ monetary policy’s agenda, in particular the ECB's monetary policy, in response to a much more severe inflation rise than anticipated, has changed substantially in recent months, acknowledging the need to increase the reference interest rate, a measure deemed unnecessary by those who believed the inflation increase to be momentary. This measure will increase businesses’ short-term financing costs, even within the context of a robust financial sector. Macroeconomic aggregates and credit will display a better behaviour allowing them to sustain these shocks which could have been much worse under a different scenario, but, unlike the last few years, the near future doesn’t seem to have a cycle.
In terms of geopolitics, it is not convenient to forecast the duration or final outcome of the events taking place in Europe. There is, however, one thing that should not be forgotten about the events which started on 24 February 2022: Lisbon is the European capital that is the further away from Moscow, which places our country in a privileged position to relocate hundreds of businesses fearing the destruction and insecurity this war carries. Services and technology multinational companies wanting to attract talent in particular, will now have even more reasons to relocate to Portugal.