Investment in Portugal is in steep decline

8 February 2017

Investment in Portugal is more than 30% below the value recorded in 2005, said the Organization for Economic Cooperation and Development (OECD) in a recent report on the Portuguese economy, which adds that unemployment will remain at double figures in the coming years.

Economic growth in 2017 will not exceed 1.2% and household consumption, which recently played an important role, “should lose influence because job creation is too weak for consumer spending to continue to expand at the current level,” the OECD said.

The report said investment will “remain weak” and exports “will grow less” than in previous years, partly due to falling demand from China and Angola, although it will “continue to be the driving force behind growth this year and next.”

The OECD acknowledged that unemployment is declining, but remains at “uncomfortably high levels,” at 10.5%, a rate that rises to 26.1% among young people.

The report said that structural reforms already implemented had allowed for “export growth,” stressing that Portugal now exports more than 40% of its Gross Domestic Product (GDP), while in 2005 exports accounted for only 27%.

The organisation also says that in Portugal, growth is slow and poses difficulties in budgetary terms, the weaknesses of the banks have to be resolved as soon as possible and it is necessary to recover investment and invest in vocational training.

The OECD’s recommendations for Portugal include further fiscal consolidation to reduce public debt, strengthening incentives to reduce bad loans at banks and reduce the length of trials and the number of pending cases in the courts. (macauhub)