For nearly three years, the forecasts of the government, the IMF and the European Commission on Portugal were exactly the same. They were concerted in the financial negotiations to release tranches of the loan. But in the last year, since the troika out of Portugal, everything changed, and the differences in the forecasts between the institutions clearly show how the two parties see differently the future performance of the economy and public finances Portuguese, which is the main reason why not also agree on the type of measures that must be taken.
The main difference lies in the degree of optimism about the ability of the country will have to, in the medium term, be able to grow at a higher rate than the current, and in a sustained manner.
The government submitted a Stability Programme in which, as always in such documents, the growth projections follow an upward trend. According to the accounts of the executive, this year the economy grows 1.6%, accelerating to 1.9% the following year and comes up to speed in 2017, with a GDP growth of over 2%, which will increase in 2018 and 2019.
The executive explains that this acceleration is caused partly by the progressive replacement of the values of civil service salaries and pensions that were soon cut at the beginning of the crisis, but mainly because the structural reforms made in recent years will start to produce its effect on the Portuguese economy’s growth potential, allowing you to leave the stagnation that records from the beginning of the millennium. In short, the Government believes that the program troika not only solved the problem of access to finance and the economy could make a structural adjustment that will give you a higher growth potential. But the co-authors of the program, however, are far from sharing this vision.
The International Monetary Fund (IMF) in particular has very gloomy expectations regarding the performance of the Portuguese economy in the near future. Just look at the most recent growth forecasts which made for Portugal. In relation to this year, the Fund assumes, as the Government, the economy will grow 1.6% for the following years, instead of pointing to a gradual acceleration, is waiting for the opposite: GDP growth decelerate to 1.5% in 2016 to 1.4% in 2017 to 1.3% in 2018 and 1.2% in 2019.
How do you explain the IMF this scenario so discouraging? “Despite the strong cyclical momentum, it is expected that investment will remain too low to keep the stock of capital and the population of working age will be reduced due to aging,” said the Fund in the latest report on Portugal.
And what is that, despite positive factors for the short term – such as the depreciation of the euro, the decline in oil prices and the incentives launched by the ECB – the economy did not perform sufficient structural change ensure a rise in potential growth.
This is also the message given by the European Commission, which states that “the potential growth should not return to rates recorded before the economic and financial crisis”, with four major obstacles to an acceleration of this indicator: the high level of indebtedness of the companies that does not allow them to invest more; unfavorable demographic perspectives; the rigidity of the labor market; and the low supply of skilled labor.
Both the European Commission and the IMF have also warned repeatedly, between leaving the troika , to the fact that the current recovery in the Portuguese economy have little sustainable features in time, namely that of being the excess based on a recovery in private consumption, which can lead to a return of foreign debt. “There remain significant risks associated with high levels of internal and external debt in various sectors and they deserve greater attention.”
Troika asks for more measures
The Government disagrees: assume that it is true that consumption has been recovering after a very deep fall, but believes that growth will continue, not only with a strong increase in exports but also without the imports shoot, which prevents the return of external imbalances.
Another focus of divergence in forecasts is on public finances. The Government is confident that this year’s public deficit will have lower barrier of 3% and that by 2016, the medium-term objective of 0.5% for the structural deficit (which takes into account the economic situation) is already reached.
No comments:
Post a Comment