Portugal can use its economic recovery to build up resilience

Portugal 2019

Porto, Portugal (Unsplash, 2019)

This article is brought to you in association with OECD.


Portugal’s economic recovery is now well established, with GDP back to pre-crisis levels, a substantially lower unemployment rate and renewed investment and domestic consumption now joining a robust export sector to drive the economy. Efforts should now focus on reducing vulnerabilities to build resilience to future shocks, according to a new OECD report.

The latest OECD Economic Survey of Portugal forecasts GDP growth for 2019 and 2020 of 2.1% and 1.9% respectively. A drop in the unemployment rate to below 7% and rising earnings are driving consumption, adding to the economic lift from tourism and manufacturing, which were behind much of the 60% rise in export volumes that the Portuguese economy experienced from 2009 to 2017.

The Survey, presented in Lisbon by OECD Secretary-General Angel Gurría alongside Portuguese Minister Assistant to the Prime Minister and for the Economy Pedro Siza Vieira and Deputy Minister and Secretary of State of Finance Ricardo Mourinho Félix, says Portugal should now take the opportunity to further shore up its public finances and banking sector.

To improve living standards and address still-high levels of poverty and inequality, Portugal should also aim to raise productivity, which has stalled in recent years, and get the long-term unemployed back into jobs.

At around 120% of GDP, Portugal’s public debt is falling but still among the highest in the OECD, limiting the country’s ability to respond to external shocks. Reducing the debt will require ongoing fiscal consolidation and further measures to offset the rising costs of ageing, including optimising health spending and further reducing pathways to early retirement. On the revenue side, the tax base could be broadened by reducing consumption tax exemptions and expanding the use of environmental taxes.

In the banking sector, there is a need to reduce the share of non-performing loans, which have declined since a peak in 2016 but remain high by OECD standards.

“Portugal has made tremendous progress restoring its economy to health since the financial crisis, but challenges remain in public finances and the financial sector,” said OECD Secretary-General Angel Gurría. “The more Portugal can do to build up resilience while its economy is turning over nicely, the better it will be able to weather any future shock, ensuring the sustainability and inclusiveness of its economic recovery.” Read the full speech.

External risks to Portugal’s outlook could include a slowdown in economic activity in major trading partners and future rises in Eurozone interest rates.

The Survey includes a thematic chapter on efficiency in the judicial system and its effect on productivity and economic performance. It notes that despite reforms to reduce the time needed to resolve a civil or commercial case in the court system, cases still typically run longer than in other OECD countries. The report also highlights the importance of continuing efforts to foster integrity and promote transparency in both the public and business sectors, as a key priority.

A second thematic chapter focuses on Portugal’s export performance. With exports still relatively low as a share of GDP, it recommends doing more to improve competitiveness on international markets, to open up to external trade and to participate in global value chains. This could include removing barriers to competition, to further encourage exporting firms to compete on price and quality, and making efforts to improve domestic infrastructure and skills.

the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Will clean air become a new global currency?

The end of the 404? Why we need to repair the internet’s crumbling infrastructure

A challenge for inclusion in the Dominican Republic’s health care services

‘Every ventilator becomes like gold’ – a doctor’s stark warning from Italy’s Coronavirus outbreak

MWC 2016 LIVE: Freemium MVNO model a success, claims FreedomPop head

North Sea fisheries: MEPs back EU plan to sustain stocks of demersal species

Migrant caravan: UN agency helping ‘exhausted’ people home

Quarantine: A mental health guide for every mood

Here’s how private investors can turn plastic into gold

Antisemitism, intolerance, can be unlearned, Guterres tells New York commemoration

How can impact investors balance the green energy equation?

Some progress made towards security in Mali, but still a long way to go, Security Council hears

Security Council extends mandate of UN Interim Force in Lebanon for a year

Africa is creating its own Great Wall – and it’s green

These forms of exercise are best for your mental health

Ramp up nuclear power to beat climate change, says UN nuclear chief

Venezuela: MEPs call for free and fair elections in the crisis-torn country

South Sudan’s peace process ‘precarious, but progress in being made’, Security Council hears

CLIMATE CHANGE FOCUS: Climate-proofing Timor-Leste

Half of all mental illness begins by the age of 14

Inegalitarian taxation on labour haunts Europe’s social model

The “Colombo Declaration” adopted at the World Conference on Youth 2014

The start-up that believes seaweed can change the world

Venezuela migrant crisis begs a ‘coherent, predictable and harmonized’ response: UNHCR

Why we need a blockchain bill of rights

Scientists in Sweden are studying the climate-cooling effects of spruce forests

Artificial intelligence: EU must ensure a fair and safe use for consumers

New systemic approach needed to tackle global challenges

The Europeans back Russia-Turkey on Syria: A ‘Waterloo’ for Saudis and their Crown Prince

The importance of including palliative care in the Universal Health Coverage and how to achieve it

Member states must stop selling EU passports immediately, MEPs demand

US-China trade war at point of no return: Washington’s demands go beyond tariffs

The new crisis is already creeping into the financial system

Statement by OECD Secretary-General Angel Gurría on the outcome of COP 25

UN Convention that promotes mediation to resolve trade disputes moves closer to entry into force

Much more than a ‘lifeline’ for millions of households, remittances can spur global growth, says UN agency

MEPs urge EU countries to be transparent about their COVID-19 vaccine supplies

Why the way of loving closes doors of health?

UN chief welcomes prisoner exchange between the Russia and Ukraine

Halting spread of drug resistance from animals to humans: deal with Council

Main results of EU Environment Council, 25/06/2018

2021-2027 EU Budget: €378,1 billion to benefit all regions

Obama turns the G20 summit into warmongering platform

China confirms anti-state-subsidy investigation on EU wine imports

Tech companies are changing, for the better

Remembering Kofi Annan

Is ECB helping Germany to buy cheaply the rest of Europe?

Northern Bahamas ravaged by ‘disaster of epic proportions’ as UN releases $1 million in emergency funds

Investors must travel a winding road to net-zero. Here’s a map

Are we at risk of a financial crisis? Our new report takes a look

Trust in facial recognition technology can be achieved. Here’s how

South Asia can become an innovation hub. Here’s how

Electronic cigarette: a still controversial qualitative imbalance

Drugs cost too much. There is a better way to fund medical innovation

Measles claims more than twice as many lives than Ebola in DR Congo

Brexit: when the hubris of one man can set the UK, the EU and the entire world on fire

How global trade can save lives and livelihoods – and help protect the planet

Vote at 16 in Malta: next stop Europe

An electric motorbike could help tackle big game poaching. Here’s how

UN chief appoints Luis Alfonso de Alba as Special Envoy for the 2019 Climate Summit

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s