Overview of the Economic Survey of Portugal

OECD Secretary-General, Angel Gurria's speech

(also avalable in Portuguese)

The economy needs to be rebalanced towards sustainable growth. Over-reliance on consumption, weak productivity gains and insufficient wage moderation have led to a sizeable external indebtedness. The economic crisis is likely to have worsened the situation, as fiscal sustainability has deteriorated. To rebalance the economy, rapid consolidation of the public finances is essential. The next challenge is to achieve a sustained reduction in the large external deficit. More fundamentally, Portugal needs to pursue policies to move to more dynamic and sustainable growth.

The tax system should be made less distortive and more efficient. As consolidation progresses, switching taxes from labour to consumption and property offers an avenue to regain eroded competitiveness and to achieve employment gains. Further, productivity and welfare can be increased by simplifying the tax system, thus reducing compliance costs, and using it to further address transport sector externalities. At the same time, there is ample scope for base broadening through reduced tax expenditures.

Policy priorities to restore productivity growth: Weak productivity gains across most sectors of the economy have been at the origin of slow growth. Productivity growth needs to be boosted by an improved business environment. The government should also play a proactive role in upgrading transport infrastructure, but investment decisions should be selective and based on transparent cost–benefit analysis. In the long run, the key issue is to close the educational gap, by enhancing educational outcomes and by promoting equity in educational opportunities.

Educational gap

Population with at least upper secondary education by age group in 2007

Source: OECD, Education at a Glance 2009: OECD indicators.

Download underlying data in Excel

How to obtain this publication

Additional information