Surprised by the results recorded in the economy and portugal’s public finances, the International Monetary Fund (IMF) was forced, in the space of just three months, the review of significant form the largest part of their estimates for Portugal. Still, it continues to see risks for the future and continues to ask the Government to take more fiscal consolidation measures.
The declaration held by the Fund in this Thursday happens at the end of a mission of a technical team of this entity in Portugal. In parallel with the European Commission and the European Central Bank, IMF staff have been in the country in recent weeks to prepare the fifth assessment report post-program that Portugal has to being subject while not to depreciate the greater part of its debt to troika.
Among the report of the fourth assessment published in September and the visit held now, the IMF has found reasons to be more optimistic about the economic performance and the budget for this year and next.
The level of economic growth, predicted to last September, a growth in 2016 of 1%, with a slight acceleration to 1.1% in 2017, but now, having known the results of the third quarter of the year, points to a growth of 1.3% this year, with a similar result in the next. IMF staff explain, in the statement issued, that the improvement in expectations arises thanks mainly to the acceleration of exports between July and September, which contributed decisively to the economy in the third quarter had grown by 0.8% and raised its year-onyear variation of the GDP to 1.6%.
The growth forecast of 1.3% for 2016 now made by the IMF is even higher than the latest estimate of the Government (who reviewed the growth of 1.8% to 1.2%). In 2017, however, the Executive points to a GDP growth of 1.5%, which remains above the new forecast of the Fund 1.3%.
Finance reiterated that it will continue “effort strict management,”
Another area where the Fund recognizes its surprise is the labour market. If before pointed to an unemployment rate of 11.8% in total this year and 11.3% in the next, now see this indicator to be just 11% in 2016, maintaining the downward trend in the following year.
In the budget plan, most once the Fund approaches to Government figures. When published the report in September, had still not confident in Washington’s ability of the country to show a deficit below 3% this year. The forecast was, in fact, exactly 3%, for both 2016 as in 2017.
Now, you see the deficit this year to stand at 2.6% and 2017 at 2.1%. Despite being slightly above the 2.4% projected by the Government, the IMF assumes for the first time that Portugal will comply with the limit of 3% imposed by the european authorities, and gives an explanation for this: "The strong efforts of the Portuguese authorities to contain the intermediate consumption and public investment to levels much lower than the budgeted mitigaram the effect on the deficit of performance below the expected revenue".
The review for the best of the projections for Portugal does not prevent, however, that the IMF keep completely unchanged their policy recommendations to the Government, with many alerts to the possibility of slippages in the future, both in the economy as in the budget.
And the first warnings will, from the outset, for the budget to 2017. The IMF, which forecasts a deficit of 2.1%, it says that if the Government wants to achieve its goal of 1.6% need to make an effort structural equivalent to 0.4 percentage points of GDP. That is, you must take measures of fiscal restraint additional of about 700 million euros.
THE IMF also says the Government should cut. "A consolidation effort-based reforms at the expense of lasting would be more friendly to growth than to depend on a compression of public investment," says the Fund.
Not fleeing to the tradition, the IMF also recommends more structural reforms, warning that "the high level of debt and the persistent structural rigidity can limit the growth with an average growth at around 1.2%". That is why, although surprised by the growth in the third quarter, the Fund does not reveal a great enthusiasm. "To conclude that we are faced with a sustained shift to a more rapid recovery, it is necessary to watch a continuation of the strong growth", alert.
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