Economy : OECD’s Gurría confident Portugal will weather economic crisis?
Portugal has made major progress in modernising its economy over recent years but has been hit hard by the crisis, according to the OECD’s latest economic survey of the country.
The immediate challenge is to gain investor confidence by reinforcing Portugal’s public finances, it says. The government’s consolidation plan is the appropriate way forward but it is important that it continues to be implemented swiftly.
Launching the survey in Lisbon in the presence of Prime Minister Josè Sócrates, OECD Secretary-General Angel Gurría said. “I am confident Portugal will weather this crisis. The ambitious fiscal consolidation strategy must be backed by a strong political consensus which the country has in the past been able to achieve."
Mr Gurría said other challenges are more deep-rooted. “If the necessary political consensus could be taken one step further and used to deepen the structural reform process that was already underway, Portugal would not only boost productivity and living standards, but would also become much more resilient to future crises.”
The survey recommends adopting a comprehensive medium-term expenditure framework supported by rules. Making the tax system less distortive and more growth friendly by rebalancing taxes away from labour to consumption and property is also important.
The OECD says recent reforms to the labour and social security codes are positive steps but more can be done to avoid the rise in unemployment becoming structural. Because labour market flexibility is achieved essentially through the extensive use of temporary contracts, there needs to be more convergence in the laws governing temporary and regular job contracts.
The survey also looks at education and praises recent reforms in the areas of vocational training. It recommends more focus to be put on evaluating the effectiveness of the programmes, particularly amid tight budget constraints.
To obtain a full copy of the report, journalists are invited to contact the OECD’s Media Division (tel: + 331 4524 9700; news.contact@oecd).
Further information is available is available at www.oecd.org/eco/surveys/portugal.