Remarks by Angel Gurría, OECD Secretary-General (also available in Portuguese)
Lisboa, 8 July 2014 – 13h00
Ladies and Gentlemen,
It is a pleasure to launch together with the Prime Minister our latest publication “Portugal: Deepening Structural Reform to Support growth and Competitiveness.”
Portugal’s economy appears to be turning the corner. We expect growth of 1.1% this year and 1.4% in 2015, broadly in line with government projections. Unemployment is starting to decline, exports are booming (5% growth on average over the last three years) and the public debt is being gradually brought under control.
To cement this improving scenario, it is important to maintain the reform agenda, and to continue to address the high levels of corporate debt (around 180% of GDP) and public debt (129% of GDP). Portugal cannot afford a relapse.
The reforms undertaken since 2009 are paying off. Greater flexibility in labour markets is contributing to hiring now that the recovery has started. Wage restraint has helped to improve Portugal's competitiveness and restore current account balance. Reforms to enhance product market competition are also delivering gains in productivity and efficiency.
And there are further gains to come in the near future. We estimate that by 2020, the improvement in productivity and GDP as a result of these reforms will be around 3.5%.
Portugal has gone through the crisis and the adjustment process without experiencing a major increase in inequality or relative poverty. In fact, the gap between rich and poor actually narrowed in the initial phase of the crisis and has since remained relatively stable, despite growing unemployment.
These are remarkable achievements. Through improvements in the tax-benefit system, the government has ensured a relatively fair distribution of the costs of adjustment. High-income households have borne a much bigger share of the burden.
As growth returns this year, one of the government's priorities should be to strengthen the social safety net for vulnerable households, while continuing to improve incentives and support the jobless in finding work.
The government should build on its successful reform agenda. Economic success and more inclusive growth in the years ahead require investing in a workforce with relevant skills for a knowledge-based economy. Improving outcomes and equity in education are therefore a pressing priority.
Portugal also needs to recover the ground lost during the crisis in scientific research and innovation. A comprehensive, nation-wide innovation strategy is necessary, linking together the contributions of government, business, and research institutions.
Finding additional financing for social protection, education and innovation will not be easy during the ongoing fiscal consolidation. However, the tax system can be made more growth-, employment- and equity-friendly.
The OECD will continue to support the Portuguese government in this endeavour. We are already working very closely on a Skills Strategy and are also in close cooperation regarding reforms to the educational system. We would welcome an extension of our cooperation to other key areas, such as competition and innovation.
Thank you for your attention.
>> OECD Better Policies Series - Portugal: Deepening Structural Reform to Support growth and Competitiveness (also available in Portuguese)
>> Official visit of the OECD Secretary-General in Portugal (8 July 2014)