After you have been surprised from mid-2015 with a new break of the investment and a slowdown in exports (which put into question the tendency of economic recovery), the Bank of Portugal believes again that the country is now prepared to embrace the pattern of growth by itself considered to be more healthy and sustainable: an economy in which the weight of private consumption is decreasing and that investment and exports are the engine. The problem: the grow up this way, Portugal will not avoid three more years of a divergence with the rest of the euro zone and it will take until 2019 to register a real GDP is identical to that of 2008, when the international financial crisis broke out.
In the economic bulletin of December published this Thursday, the entity headed by Carlos Costa highlights a number of positive developments in the Portuguese economy. On the one hand presents forecasts which show the levels of real estate investment, businesses and the State to begin to get out of the very low values that are from the beginning of the crisis. On the other hand, sees the Portuguese companies continue to gain market share at the international level, which means in a global economic environment that is expected to more positive, a stronger growth of exports.
For the investment, after the disappointment that is the decrease of 1.7% this year, the Bank of Portugal believes in a growth of 4.4% in 2017, a pace that keeps in 2018 and 2019. It is a prediction that overcomes, not only the projections of the European Commission (3.1% in 2017) and the IMF (2,5%), as also to the Government itself (by 3.7%). The bulletin even states that "the greater dynamism of the Portuguese economy in the face of 2016 will be sustained by an acceleration of Gross Fixed Capital Formation (GFCF), based on a recovery of business investment".
In the case of exports, the Bank of Portugal is projecting a growth of 3.7% in 2016 to 4.8% in 2017, assuming that the export sector nationwide will be able to increase their sales at a rate higher than the growth of external demand directed to the Portuguese economy.
it Is based on the good results of these two indicators that the central bank has forecast growth for the Portuguese economy that are very close to the projections of the Government. The Bank of Portugal, which, after a growth of 1.2% this year, the economy will accelerate moderately to 1.4% in the next. For 2018 and 2019, the growth projection of 1.5%.
The most surprising of these numbers is that if provides that occurs an acceleration of growth in a scenario that projects a significant slowdown of private consumption. The bank anticipates a negative effect from the fall in purchases of durable goods such as automobiles (which have grown a lot in 2015 and 2016) that will cause the private consumption to pass a variation of 2.1% in 2016 to only 1.3% in 2017.
This means that, to confirm these forecasts, the Portuguese economy will grow faster than private consumption, a fact rare in the economic history of the Portuguese, leading to a decrease in the weight of this indicator. The Bank of Portugal commends this development. “These traits are consistent with a growth pattern more sustainable, characterized by the continuation of the reorientation of resources to the sectors most exposed to international competition, and more productive, by maintaining a surplus in the external accounts, and by continuing the process of reduction of debt in the private sector is not financial,” he says in the report.
The problem is that, when we assume a negative contribution of private consumption, although the trajectory of growth can be seen as more sustainable, will hardly produce impressive results. Because, even if you are to grow further, the investment will remain "at levels that only allow you to compensate for the depreciation of capital."
Carlos Costa and his peers point out that "the GDP growth should be close to, although lower than, the amount projected for the euro area, not reversing the negative differential accumulated between 2010 and 2013." In fact, according to the latest forecasts published by the ECB, the euro area is expected to grow by 1.7% both this year, as in 2017. And for 2018 and 2019 points to growth rates of 1.6%.
This means that Portugal, confirm the forecasts of the central banks, will continue to stay below the average european growth at least until the end of the current parliamentary term, in 2019.
Debt high, a trend of reduction of the population and lack of structural reforms are the causes identified by the Bank of Portugal for the continuation of this failure in the convergence objective. "This absence of real convergence compared to the euro area reflects the persistence of structural constraints to the growth of the Portuguese economy, in which assume a particular relevance to the high levels of indebtedness of public and private sector, an unfavourable demographic developments and the persistence of inefficiencies in the labour markets and of the product that require the continuation of the process of structural reforms," says the report.
The Bank of Portugal is still a matter of alerting people to the risks involved in the projections now presented. The threats are mostly related to problems that Portugal may experience in the access to finance of the market and the need for the application of budgetary measures with an impact of recession to correct for deviations in deficit goals.
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