Having been hit hard by the global crisis, the Portuguese government has taken action to put its economy back on track, and to correct external and budgetary imbalances. Public finances have strengthened, and the current account deficit has closed on the back of gains in competitiveness and improvements in export performance. Portugal has also been able to reduce income inequality and relative poverty, a major accomplishment during a severe crisis with record levels of unemployment. As Portugal successfully exits the EU-IMF-ECB-supported programme and emerges from recession, it is more important than ever to build on these achievements.
At the request of the Portuguese authorities, the OECD has carried out an assessment of the impact of the reforms implemented to date on the economy’s longer-term growth outlook. The analysis is based on OECD indicators of the restrictiveness of Product Market Regulation (PMR) and the strictness of Employment Protection Legislation (EPL). It updates the OECD report Portugal: Reforming the State to Promote Growth, published in 2013.
According to the OECD’s Going for Growth exercise, Portugal is among the OECD countries with the best recent track record of responsiveness to structural reform recommendations. The reforms undertaken since 2009 to promote competition in product markets and enhance the dynamism of the labour market are expected to raise productivity and potential GDP by at least 3.5% by 2020.
While in Lisbon, the Secretary-General had meetings with Mr. Aníbal Cavaco Silva, President of Portugal, Mr. Pedro Passos Coelho, Prime Minister of Portugal and Mr. Carlos Costa, Governor of the Banco de Portugal, as well as several Ministers and high level officials of Portugal.
The average worker in Portugal faced a tax burden on labour income (tax wedge) of 41.1% in 2013 compared with the OECD average of 35.9%. Portugal was ranked 12 of the 34 OECD member countries in this respect.
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Old-age poverty decreased in Portugal in the final few years of the last decade by more than twice the OECD average. The effective age of labour market exit is high in Portugal in international comparison...
In Portugal, health spending has been reduced from 10.8% of GDP in 2009 to 10.2% now. This has been achieved by rationalising spending on pharmaceuticals, promoting the use of generic drugs, moderating salaries; cutting the fees paid to hospitals, and increasing user charges, while still protecting those in most need, said OECD Secretary-General.
Education at a Glance 2013 - Country notes and key fact tables
Portugal’s enforcement of its foreign bribery laws has been extremely low. Not a single prosecution has resulted from 15 allegations of Portuguese companies bribing foreign officials in high-risk countries.
Drawing on the OECD’s expertise in comparing country experiences and identifying best practices, the Better Policies series tailors the OECD’s policy advice to the specific and timely priorities of member and partner countries, focusing on how governments can make reform happen.
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After two decades of strong economic growth and convergence in living standards towards the levels of more prosperous OECD countries, Portugal’s performance weakened in the 2000s, productivity growth slowed and competitiveness deteriorated. Restoring Portugal’s potential for strong, inclusive growth calls for a comprehensive reform of the State.
Prime Minister Passos Coelho has defined as a key priority for his Government the promotion of economic growth and employment, while sheltering the social groups most affected by the recession. He has adopted courageous – and necessary – steps to address some of the underlying weaknesses of the Portuguese economy, said OECD Secretary-General.