Daily Management Review

Portugal pulls through crisis


According to the latest estimates, Portugal's economy grew by 2.7% last year, the Statistical Office of the country said.

tiseb via flickr
tiseb via flickr
According to Statistics Portugal, GDP grew from 1.5% in 2016 to 2.7% last year, mainly due to domestic demand and investment, while the level of external demand remained unchanged.

Growth rates in 2017 are strengthening the economic recovery that began in 2014, when Portugal withdrew from a three-year economic adjustment program, regulated by the EU and the International Monetary Union. The Portuguese economy has been expanding for 17 consecutive quarters.

The projected GDP growth last year is well ahead of the original forecast of growth of 1.6%, based on which the government made the budget for 2017. Growth exceeding the forecast, contributed to a sharp reduction in the budget deficit last year to a record low of 2% of GDP.

The government revised its growth forecasts upward in budget proposals for 2018 to 2.6% in 2017 and 2.2% this year. However, Portugal remains on the verge of a general recovery of the Eurozone. Commission.

According to Statistics Portugal, GDP grew by 2.4% in the fourth quarter compared with the same period in 2016 and by 0.7% in the third quarter.

The economic recovery allowed Portugal to drastically reduce the budget deficit and exit the procedure for the EU's excessive deficit last year. The government expects to reduce the budget deficit to about 1.2% of GDP last year - the lowest rate since the country's return to the democratic system in 1974 - and intends to reduce it to 1.1% this year.

This week, Portugal again received a positive response from the European Commission for strong performance on the economic front. This means a turnaround for Portugal in Brussels, as it took less than two years after the EU said that Portugal could face sanctions because of the deficit target deficit of only 0.2%, which is significantly less than in other countries, such as France.

At the same time, President of the European Commission Jean-Claude Juncker questioned such an attitude towards Paris, saying that the country could violate the goals, "because this is France." However, after the publication of the winter economic forecast in Brussels, the European Commissioner for Economics and Finance Pierre Moscovici, who is a Frenchman, spoke positively about Portugal.

He called the results of the Portuguese economy during 2017 "remarkable", after they grew by about 2.7%.

Moscovici called these figures "stable and reliable," stressing that Portugal was in line with economic forecasts.

"Portugal is experiencing impressive growth, but it is not yet one of the seven largest economies in the euro area," said the Commissioner for Financial and Economic Affairs.

The recently published official data showed that Portugal was the country that demonstrated the best economic performance in the period from July to September in the euro area.

The acceleration of the economy confused experts who forecasted a much lower growth and even issued a warning about possible difficult times for the country.

In general, the growth rates for the euro area and the EU also surpassed expectations in the past year, as the transition from economic recovery to expansion continues. It is expected that the euro area and the EU economy will grow by 2.4% in 2017 - the fastest pace in a decade and a pace that is somewhat lower than what was registered in Portugal.

Pierre Moscovici added that "the eurozone shows growth rates that were not observed before the financial crisis: unemployment and deficit continue to fall, investments are growing."

These figures were accompanied by news that the unemployment rate in Portugal for 2017 was fixed at 8.9%, which is 2.2% less than in the previous year, and even higher than the government's forecast at 9.2 %.

The Minister of Labor and Social Solidarity of Portugal, José António Vieira da Silva, said that these indicators are "very positive and encouraging."

In particular, he stressed that the "very significant" reduction in long-term unemployment in recent months, the growth in employment is explained by the fact that the active population is growing and that the country has great opportunities for the accumulation of welfare.

source: reuters.com