Portugal: Staff Concluding Statement of the Seventh Post-Program Monitoring Mission


The Portuguese authorities announced on November 29, 2018 their intention to pay off their remaining debt to the IMF this year. Portugal’s early repayments, started since 2015, have already markedly reduced its outstanding debt to the Fund. Early repayments to the IMF reflect Portugal’s favorable market access conditions and send a positive signal to investors and markets. These operations are financially advantageous because they improve the public debt maturity profile and generate interest bill savings. Combined with the policy of maintaining strong cash reserves, this contributes to a further build-up of financial defenses against future adverse events. Once the announced repayment takes place, Portugal will exit Post-Program Monitoring status.

Economic activity remains cyclically strong, although moderating since GDP growth peaked in 2017. Third-quarter real GDP growth of 2.1 percent y-o-y suggests a deceleration after first- and second-quarter outturns, respectively, of 2.2 percent and 2.4 percent y-o-y. The deceleration reflects largely some loss of momentum in exports and investment. The job market has continued to improve, with unemployment falling from 7.9 percent in December 2017 to 6.6 percent in September 2018, driven by broad-based employment growth.

The economy is projected to continue to decelerate gradually towards its medium-term potential. Growth is projected at 2.2 percent in 2018, easing to 1.8 in 2019, and toward 1.4 percent in the medium term. Investment and exports should continue to be important drivers of growth, albeit at a slower pace.

The main downside risks looming over the economy relate to the external environment. Portugal would directly feel the negative consequences of lower euro area wide growth, Brexit-related turbulence, and weaker international trade following increased protectionism. On the domestic front, there is a risk that the government might adopt weaker policies that could undermine investor confidence and the business environment, and possibly result in increased budgetary rigidities and a reduction in the quality of government expenditures. In contrast, strong macroeconomic, macro-financial, and structural policies would not only bolster the outlook, but would also increase Portugal’s resilience to market volatility and other shocks, including in the event of spillovers from other euro area countries, as shown by the experience of recent months. On the upside, more robust cyclical developments than currently projected could materialize.

Robust economic growth, careful expenditure execution, and a falling interest bill mean that the 2018 fiscal deficit target will likely be achieved, and public debt will decline again this year. For 2019, while the budget targets a headline deficit of 0.2 percent of GDP, staff project a deficit of 0.4 percent of GDP, reflecting more moderate economic growth assumptions for next year (1.8 percent rather than 2.2 percent assumed in the budget). This forecast assumes that policies evolve in line with the 2019 budget, including in areas such as the unfreezing of career progressions. After removing ‘one-off’ effects, interest payments, and the cyclical components, this would imply a slight deterioration of the structural primary balance of 0.1 percent of GDP relative to 2018. Under staff’s assumptions, debt will continue its downward trajectory to 121 percent of GDP in 2018, 118 percent in 2019, and 103 percent of GDP by 2023.

Despite declining in the last few years, high public debt remains a major vulnerability, requiring continuing fiscal consolidation efforts. The currently favorable conditions provide an opportunity to frontload the multi-year fiscal consolidation envisaged in the government’s Stability Program, and thus speed up public debt reduction, contributing to favorable borrowing conditions throughout the economy. Moreover, a stronger primary surplus would also provide additional buffers against adverse changes in interest rates and economic growth and other contingencies. Such strengthening needs to be built on a durable containment of current expenditure, including through comprehensive reviews of the level and composition of public employment and of pensions, especially at the higher end, while preserving capital spending.

Important progress has been made in repairing the banks’ balance sheets, but continued effort is needed to reduce vulnerabilities. Asset quality improved further this year, with NPL ratios falling from 13.3 percent at end 2017 to 11.7 percent in June 2018, while the regulatory capital ratio has remained stable above 15 percent in the same period. Nevertheless, banks are constrained by still high NPL levels and low profitability, and will face additional cost pressures as MREL requirements are phased in. Other vulnerabilities include significant concentrations of exposures to real estate (38 percent of total assets at end-2017, with housing loans accounting for about 28 percent of total assets) and, to a lesser extent, public debt (about 15 percent of banks’ assets at end-2017, with the domestic sovereign accounting for 8 percent of total assets). Supervisors should ensure that banks follow through on their NPL reduction plans and strengthen their internal risk management and corporate governance. They should also encourage banks to step up efforts to improve operational efficiency and profitability. Finally, supervisors should continue to monitor the evolution of housing prices, which have been rising fast in Portugal in recent years, and ensure that banks have sufficient capital buffers to withstand adverse shocks to their balance sheets.

Sustained robust growth over the medium-term is key to the continuing deleveraging in the public and private sectors, helping reduce vulnerabilities. Despite seeing significant reductions in the last several years, household and nonfinancial corporate debt ratios in Portugal exceed the corresponding European averages. Just like with public debt, deleveraging benefits from sustained economic growth. Strengthening growth will require fostering investment—as well as domestic saving to avoid a weakening of the country’s external position. Raising productivity and investment demands maintaining the focus on improving the regulatory environment, supporting firms’ capacity to grow, strengthen their capital, and innovate, and building up skills levels in the population. Continuing ongoing efforts to strengthen the legal and institutional framework for debt enforcement and insolvency are necessary to support a more productive allocation of economic resources. Keeping labor markets flexible is important for Portugal’s ability to process adverse shocks, and maintaining competitiveness requires wage growth consistent with developments in productivity.

         JORNAL ECONÓMICO - 16.NOV.18

Opinião

De S. Jorge da Mina à Web Summit

António Gaspar, Professor Universitário – Universidade Europeia, Coordenador de Banca & Seguros

 

 

A crise de Portugal não é de agora e radica no século XV, mais propriamente na falta de visão estratégica da classe política então dominante.

Da construção da fortificação de S. Jorge da Mina à Web Summit, que terminou há dias, vão 536 anos!
Visando proteger o ouro que chegava do Brasil e as especiarias oriundas da Ásia, D. João II mandou construir esta feitoria, onde eram trocados trigo, tecidos, cavalos e conchas por ouro (até 400 Kg/ano).

A visão de longínquo alcance de D. João II nunca foi acompanhada pela nossa burguesia, que não soube estar ao melhor nível do que se passava com as suas congéneres europeias.

Ora, ao tempo, o que dava poder era exactamente a posse do ouro. E que fez a nossa burguesia de então? Nesse mesmo entreposto, entregou o ouro a flamengos e holandeses por troca de dinheiro, passando a viver à “sombra da bananeira”, sem que investissem esse mesmo meio de troca, gastando em sumptuosidades até as bolsas ficarem vazias.

Costumo dizer aos meus alunos que a crise de Portugal não é de agora e radica no século XV, mais propriamente na falta de visão estratégica da classe política então dominante, que não soube acumular a riqueza que dava poder, que não soube investir, para que o nosso país criasse bases de desenvolvimento sólidas, onde hoje pudesse estar ancorado. Por outras palavras, a nossa burguesia não foi empreendedora!

A Web Summit, terminada há dias, é exactamente a demonstração contrária ao que se passou há mais de 500 anos, o evento onde muitos portugueses, mostraram ideias inovadoras, competiram com os melhores dos melhores a nível mundial e demonstraram que Portugal vive momentos históricos, de grande dimensão intelectual, de inovação e de empreendedorismo. Fica por vezes a faltar o financiamento para colocar boas ideias em prática, mas uma das finalidades deste evento é premiar as melhores ideias com financiamento adequado.

Recupero aqui a forma como o nosso primeiro-ministro apelidou o organizador do evento – “o novo Fernando de Magalhães”. Creio ser algo exagerado este comentário, mas percebe-se no estertor e na dimensão da visibilidade mundial que regista. Ressalvando as devidas distâncias, a Web Summit veio colocar Portugal na rota do empreendedorismo e dar visibilidade ao que de bom por cá se concebe aos mais variados níveis – cultural, científico, nano-industrial, tecnológico, etc..

Ninguém contestará a evolução registada entre estes dois marcos históricos portugueses. Mesmo considerando o distanciamento dos dois momentos, não só histórico como qualitativo, podemos concluir que foi tempo demasiado para que Portugal e os seus cidadãos mais empreendedores pudessem reagir.

Nada justifica um tempo tão largo em que o atraso se perpetuou. De pouco servirão as desculpas dos últimos 100 anos – com a fase final da monarquia, a 1ª República, o Estado Novo e o aculturamento ao tempo democrático.

Foi muito tempo de gente sem ideias. Da burguesia que só o foi de nome e nunca soube fazer jus ao seu próprio estatuto, ao contrário de holandeses e flamengos.

O meu "Artigo de Opinião" no Jornal Económico de hoje.

https://jornaleconomico.sapo.pt/noticias/de-s-jorge-da-mina-a-web-summit-378133

Congresso da FENCA - 24-26 OUT. - Estrasburgo

"O Futuro das Agências Bancárias"

O meu Artigo de Opinião de dia 26/OUT/18 no JORNAL ECONÓMICO.

https://jornaleconomico.sapo.pt/noticias/o-futuro-das-agencias-bancarias-370561

O meu Artigo de Opinião - Jornal Económico - 28/SET/18.
My "Opinion Article" at - Jornal Económico - 28/SET/18.
"The announced real estate bubble".

https://jornaleconomico.sapo.pt/noticias/a-bolha-que-se-anuncia-359660

	VARIAÇÕES HOMÓLOGAS
	HOMOLOGOUS CHANGE
Empréstimos de Outras Instituições Financeiras Monetárias a Particulares
Loans of Other Monetary Financial Institutions to Private Individuals
					Milhões de Euros
					Millions of Euros
Crédito		Concedido		Cobrança Duvidosa
Banking Credit	Installment Credit			Uncertain Collection
Habitação	JUN.17	93.767			2.101
Mortgage	JUN.18	92.837	-0,99%		1.894	-9,85%
Consumo	JUN.17	12.718			702
Consumption	JUN.18	14.505	14,05%		617	-12,11%
Outros Fins	JUN.17	8.540			2.028
Another Finality	JUN.18	7.637	-10,57%		1.588	-21,70%
Total	JUN.17	115.026			4.831
Total	JUN.18	114.979	-0,04%		4.098	-15,17%
Fonte: Boletim Estatístico do Banco de Portugal
Source: Portugal Central Bank

	VARIAÇÕES HOMÓLOGAS
	HOMOLOGOUS CHANGE
Empréstimos de Outras Instituições Financeiras Monetárias a Empresas Não Financeiras
Loans of Other Monetary Financial Institutions to Non-Financial Corporations
					Milhões de Euros
					Millions of Euros
	Crédito Concedido				Cobrança Duvidosa
Installment Credit				Uncertain Collection
	JUN.17	75.096			10.618
	JUN.18	72.238	-3,81%		8.302	-21,81%
Fonte: Boletim Estatístico do Banco de Portugal
Source: Portugal Central Bank

PORTUGAL - Continued fiscal discipline will be key. 
 The fiscal performance in 2017 was robust, reflecting strong economic growth, controlled budget execution, and falling interest costs. Building on the strong track record established in the last several years, fiscal consolidation should focus on a sustainable plan to reduce current expenditure, with particular attention on wages and pensions. Fiscal discipline is a cornerstone of debt reduction.

PORTUGAL - External balance.
Trade has played an increasingly important role as a driver of economic growth. A booming tourism sector has meant that exports of services have offset an increase in goods imports.

 

PORTUGAL - Job-rich growth.
The unemployment rate fell to a record low of 7. 1 percent in April 2018. The long-term unemployed are also returning to work in large numbers. The low unemployment rate is based on a vigorous improvement in employment, which grew by 3.3 percent in 2017, even as labor force participation increased by 1.1 percent.

  

A PRAGA DAS COMISSÔES BANCÁRIAS

A actividade nobre da Banca sempre foi a intermediação financeira – transformação do passivo captado (depósitos) em activo (crédito concedido a clientes).

Até há cerca de 15 anos, a Margem Financeira (MF) – (Juros e rendimentos similares – Juros e encargos similares), o Produto Bancário (PB) e a pouca expressão das Provisões para crédito vencido e imparidades, eram mais que suficientes para cobrir os Custos de Transformação e a Banca poder apresentar Resultados Liquidos altamente positivos.

Mas este paradigma veio a alterar-se desde então.

Margem Financeira a estreitar-se cada vez mais, e particularmente a partir de 2009 e com a crise que se abateu sobre a economia portuguesa, com Provisões para crédito vencido (de cobrança duvidosa) e imparidades a registarem uma subida exponencial, a Banca na sua generalidade começou a entrar em grandes dificuldades, sublinhando o “período da crise”, no qual alguns bancos tiveram que se recapitalizar, por forma a poderem cumprir com os rácios de solvabilidade impostos pelo Banco Central Europeu (BCE) e pelo regulador interno. Para agravar ainda mais a situação financeira da Banca, os valores negativos há muito registados pelo seu principal indexante nos créditos concedidos – Euribor (em todos os prazos).

Perante este conjunto de dificuldades anteriormente referenciadas, a Banca escolheu o caminho mais fácil – atirar despudoradamente para cima dos seus clientes, comissões por tudo e por nada !

O negócio bancário mudou !

O tráfego nos balcões diminuiu de forma geométrica porque assim os bancos o quiseram, ao lançar aplicações que permitem aos seus clientes resolver (quase) todas as suas relações com o seu banco a partir de qualquer lugar e durante as 24h do dia. Desta forma, a banca liberta recursos que poderão ser utilizados de forma mais eficiente na sua estratégia, se bem, que na sua esmagadora maioria a banca tenha seguido o caminho das reformas antecipadas, rescisões de contratos e não renovação daqueles que se encontravam com prazo fixo, diminuindo assim os seus custos, e não seguindo um caminho de reafectação.

Mas, estas medidas não foram e não são suficientes, pelo que é necessário “inventar” comissões, para ajudar a inverter a natureza de Resultados Liquidos negativos para positivos. É o caminho mais fácil, pois então. E o cliente não tem forma de escapar a esta voracidade ! Porque toda a banca está nesta dinâmica avassaladora das comissões desenfreadas.

Não podemos perder de vista que os Depósitos a Prazo (DP) há muito que deixaram de pagar qualquer taxa de juro, mas em contrapartida, quem quiser fazer um Crédito ao Consumo ou para Outras Finalidades, fácilmente pagará 6 ou 7%. Anacronismo – a banca não paga nos DP mas recebe (e bem) nos seus financiamentos.

A DECO entregou no passado mês de Julho, uma petição na Assembleia da República, contra as comissões bancárias injustificadas. Como exemplo de comissões que nunca o deveriam ser, temos: comissão de manutenção de conta, comissões de processamento de créditos (habitação, consumo, leasing, ALD, etc).

O negócio bancário mudou, mas a banca não soube procurar um novo modelo que não penalize despudoradamente os seus clientes. Está a faltar visão estratégica de mudança.

Estamos num período de taxas históricametne baixas, mas mesmo perante esta situação de margens muito estreitas, a banca continua a insistir na concessão de crédito com matrizes de aceitação de novos riscos, muito larga. Se essa “subtileza” não fará muito rombo nos créditos de curto prazo e de montantes relativamente baixos, já o mesmo não se poderá dizer de um crédito á habitação, não só pelo seu dilatado prazo, mas também pelo seu montante.

E para fazer face ao mais que previsivel aumento das Provisões, há que criar novas Comissões e carregar naquelas já existentes.

Tem a palavra a Assembleia da República !

 

 

O meu Artigo de Opinião, no JORNAL ECONÓMICO de hoje.

https://jornaleconomico.sapo.pt/noticias/a-praga-das-comissoes-bancarias-349493

CRÉDITO – EQUILIBRIO NO FIO DA NAVALHA

Domar (D) foi um economista russo mais tarde naturalizado americano, que conjuntamente com Harrod (H), este um economista inglês, que conjuntamente desenvolveram um modelo económico que assentava na tentativa de explicação da taxa de crescimento duma economia em termos do nível de poupança e da produtividade do capital. A grande crítica a este modelo, vem do facto de H-D considerarem que existe apenas uma taxa de poupança garantida e não diferentes taxas, associadas a diferentes classes sociais. Daí o célebre “equilíbrio no fio da navalha”, como ficou conhecido no mundo da Economia.

Vem isto a propósito, para ilustrar o que se está (de novo) a passar com a Banca em Portugal, ou melhor, com a política de concessão de crédito.

Parece que a Banca esqueceu o que se passou nos tempos de crise – particularmente entre 2008 e 2013 – e volta a insistir no mesmo modelo de negócio, isto é, conceder crédito a quem, muito provávelmente no futuro (mais próximo do que alguns julgam) irá ter sérios problemas para solver as suas dívidas.

O negócio principal da Banca é a intermediação, isto é, captar recursos e aplicá-los em crédito. No entanto, tal deverá ser feito com muita parcimónia respeitando uma matriz de aceitação de riscos de crédito apertada e que dê conforto ao credor (e já agora também ao mutuário), para que em situação de maior aperto orçamental, o mutuário consiga solver as suas responsabilidades, evitando a criação de provisões por parte da Banca para crédito vencido e imparidades.

Já não vou aqui falar da subida das taxas de juro de referência que qualquer ano irão subir. Esta situação, se para créditos de curto prazo (crédito ao consumo e outras finalidades), não compaginará perigos maiores, o mesmo já não acontecerá para créditos á habitação, devido á sua longevidade.

Outro sim, falo dum inevitável abrandamento da actividade económica que trará consigo menor distribuição de rendimentos, e consequentemente, com famílias endividadas muito para além do limiar do esforço de equilíbrio financeiro, irão começar a derrapar e a Banca a voltar a um passado que todos conhecemos.

As medidas tomadas recentemente pelo Banco de Portugal foram interessantes, mas ficaram aquém daquilo que se exigia, para uma maior protecção de quem empresta e de quem pede emprestado.

Depois voltaremos ao mesmo: o Estado a injectar milhares de milhões para salvar mais algum banco, com custos para todos nós, escudando-se naquela velha justificação – “to big to fail !”

Que ninguém tenha dúvidas – a Banca parece não ter aprendido com os erros do passado bem recente. E está de novo num “equilíbrio de fio da navalha”, que á mínima constipação da economia, provoca-lhe uma pneumonia de muito difícil cura.

Sendo a economia portuguesa uma economia de mercado, não entendo porque não deixar o mercado funcionar. Isto é, as empresas que têm dificuldades estruturais tais, que não conseguem sobreviver pelos seus próprios meios, há que as deixar seguir o seu curso normal. Isto deveria ter já acontecido com a Banca.

Caso tivesse acontecido, o País teria os meios suficientes, para fazer mais hospitais; para não deixar o serviço nacional de saúde no pântano que hoje se encontra; para reduzir a taxa de pobreza; para investir na recuperação de tantas estradas degradadas ou mesmo para a construção do novo aeroporto de Lisboa.

A importância sistémica que os governos têm atribuído à Banca, não pode justificar tudo. Os erros terão que ser pagos, não pelos portugueses que nada tiveram a ver com más gestões, mas pelos accionistas dessas mesmas instituições.

Uma palavra final só para a CGD, que sendo do Estado, acabamos todos nós por pagar aumentos de capital, por desmandos feitos por aqueles que o Estado escolheu.

 

Orador e Comentador - Economia, Finanças, Estratégia, Análise e Gestão de Risco de Crédito, Gestão Financeira Internacional e Gestão Bancária.

Portugal: Staff Concluding Statement of the 2018 Article IV Mission - FMI


An International Monetary Fund (IMF) mission visited Frankfurt, Porto and Lisbon during May 15-29, 2018, for the annual Article IV consultation discussions with Portugal. At the end of the visit, the mission team issued the following statement:

Portugal’s near-term outlook remains favorable, although external risks have risen lately. Following the strong outcome in 2017, fiscal targets for 2018 appear feasible, while stability and confidence in the banking system have improved. Sustained and vigorous growth is needed for Portugal to converge to average EU living standards and to reduce the vulnerabilities from high public and private debt. Ensuring balanced growth requires higher and sustainably financed investment and continued efforts to address structural rigidities. Current favorable conditions create an opportunity for continuing structural fiscal consolidation and support for the supply side of the economy.

1. Job rich growth continued in the last year, supported by a pickup in investment and exports, and prospects remain largely favorable. Real GDP grew by 2.7 percent in 2017 on the strength of investment and exports of goods and services, notably tourism. Flash statistics for the first quarter of 2018 showed somewhat subdued growth largely on account of temporary factors affecting exports, and possibly also of moderation of demand in some export markets. The mission team forecasts real GDP growth to reach 2.3 percent this year, decelerating to 1.8 percent in 2019 and gradually towards a rate of about 1.4 percent in the medium term. Unemployment has fallen to 7.4 percent in March, below the euro area average, with reductions across all dimensions of labor under-utilization. In some sectors of the economy firms are beginning to find it difficult to fill vacancies, especially for high-skill jobs. Growth of real average wages continued in 2017, while the minimum wage coverage rose to 22 percent of all earners (from 20.6 percent in 2016) according to provisional social security data, reflecting in part the growth in low-skill positions.
   
2. Risks to the favorable baseline scenario are mostly external, but shocks would be amplified by lingering domestic vulnerabilities. Recent months have seen a rise in uncertainty around the world, with weaker readings in high-frequency indicators of activity or rising political and policy uncertainty in some partner countries, as well as heightened volatility in some currency and bond markets. This is a reminder that external conditions, while still broadly benign, can turn less favorable. A weakening of euro-area growth would significantly affect Portugal, an open economy whose exports have successfully increased their presence in foreign markets. Given still high leverage across the economy, market interest rate surprises could have an impact on cashflows and activity. The main domestic risk is that of yielding to pressures to erode past policy efforts, which have facilitated the successful recovery seen so far.

3. Portugal made significant progress on fiscal consolidation in 2017, helped by disciplined budget execution, and the deficit target for 2018 appears feasible. The overall fiscal deficit (excluding the recapitalization of CGD) closed well below the official target in 2017 thanks to the strong economy and a structural primary balance in surplus for a sixth straight year—in fact, 0.4 percent of GDP higher than in 2016. This allowed the government to absorb the CGD recapitalization cost while keeping the headline deficit, as measured by the Eurostat rules, within the Stability and Growth Pact benchmark of 3 percent of GDP. For 2018, continued focus on expenditure control and ongoing cyclical momentum in the economy make the attainment of the deficit target of 0.7 percent of GDP feasible. The strong fiscal performance has generated important spillovers in the economy, such as lower country risk spreads, which tend to benefit most borrowers.
   
4. The favorable environment provides an opportunity to make faster progress in the reduction of public indebtedness. While the Stability Program’s objectives for fiscal consolidation for the period 2018-2022 are ambitious, the bulk of the adjustment is proposed for 2020 and 2021. By that time, however, the mission expects that growth will be decelerating towards its medium-term potential. Moreover, the uncertainty around any economic projection (be it the mission’s or the authorities’) becomes wider with time. The mission would thus see merit in frontloading the adjustment envisaged in the Stability Program both to avoid the risk that policy may become procyclical, and to ensure that the adjustment envisaged is robust to potential adverse surprises down the road. Moreover, continuing structural consolidation, by reducing debt, will help lower the government’s interest bill, releasing resources for more desirable uses, and contribute to re-build fiscal buffers to face future adverse shocks. Containing the growth in the government wage bill and pension spending is key to keeping current expenditure growth moderate while safeguarding the quality of public services and public investment.
   
5. The past year saw significant improvements in financial stability. Capital ratios have increased, while the stock of non-performing loans (NPL) has fallen by over EUR 13 billion from its peak in mid-2016, bringing the NPL-to-loans ratio to 13.3 percent at end-2017, down from its 17.9 percent peak. This pace is consistent with meeting or exceeding the banks’ NPL reduction objectives. While these are encouraging results, additional progress is needed to strengthen banks’ profitability. This will help them absorb additional costs that might arise from MREL and to provide support to the economy. Moreover, supervisors should continue to encourage banks to strengthen further their corporate governance and risk management while persevering in their NPL-reduction and cost-cutting strategies to generate internal capital. Although the growth of credit aggregates was still negative, the flow of new credit has strengthened. The trend toward increasingly favorable terms in mortgages and consumer loans prompted the Banco de Portugal to take timely macroprudential measures. Rising house prices should continue to be monitored, given the importance of mortgages in the banks’ loan books.

6. Attaining faster growth in the medium term requires building on past reforms and generating soundly financed investment. Steadily improving skill and education levels should continue to support growth in coming years. Increasing investment on a sustainable basis can contribute to strengthen growth in productivity and output, helping offset the adverse effects of long-term demographic trends in the growth of the labor force. Investment can be fostered by enhancing business conditions, streamlining excess regulations, further improving corporate restructuring and liquidation processes, and preserving or increasing the flexibility of institutions and markets. The present favorable conditions are propitious for taking additional steps in these areas. Moreover, labor reforms undertaken in past years have facilitated the job-rich character of the recovery currently underway. But introducing new rigidities, or reintroducing old ones, would undermine competitiveness and productivity, and make it difficult for firms to manage fluctuations in demand. Encouraging the buildup of equity and stronger private savings would also help ensure that investment can increase without giving rise to external imbalances.

Portugal Economic Outlook - April.18

Data for the first quarter signals that economic growth, while still strong, likely moderated slightly from last year’s rate; in 2017, it shot up to a 17-year high on the back of soaring exports.
The most notable signs of a moderation came from a slower pace of expansion in industrial output in the first two months of the year compared to the final quarter of 2018, along with a discernible fall in retail sales growth in February.
 Survey-based data reinforced the view of a cooling trend; economic sentiment continued to slide throughout the first quarter.
Nonetheless, the economy remains resilient, alongside a record-low budget deficit.
Prime Minister António Costa’s left-wing government has drawn accolades for the turnaround in growth, achieved while maintaining post-crisis fiscal discipline.
On 13 April, Finance Minister Mário Centeno presented a 2018–2022 program aimed at fiscal stability, projecting a budget surplus in 2020 that if achieved would end 25 years of uninterrupted deficits.

Quando Portugal "mandava" no Mundo - TRATADO DE TORDESILHAS

O Tratado de Tordesilhas, foi assinado na povoação castelhana de Tordesilhas no dia  7 de Junho de 1494, envolvendo os reinos de Portugal e Castela - D. João II e D. Fernando II de Aragão.
Este Tratado foi um tratado celebrado entre o Reino de Portugal e o recém-formado Reino da Espanha para dividir as terras “descobertas e por descobrir” por ambos os Reinos fora da Europa.
Este Tratado surgiu na sequência da contestação portuguesa às pretensões da Coroa espanhola resultantes da viagem de Cristóvão Colombo, que ano e meio antes chegara ao chamado Novo Mundo, reclamando-o oficialmente para Isabel, a Católica.
O Tratado de Tordesilhas definia como linha de demarcação o meridiano 370 léguas a oeste da ilha de Santo Antão no arquipélago de Cabo Verde. Esta linha estava situada a meio caminho entre estas ilhas (então portuguesas) e as ilhas das Caraíbas descobertas por Colombo, no tratado referidas como “Cipango” e Antília.Os territórios a leste deste meridiano pertenceriam a Portugal e os territórios a oeste, à Espanha. O Tratado foi ratificado pela Espanha a 2 de Julho e por Portugal a 5 de Setembro no ano de 1494.
Assim, no âmbito dos conceitos internacionais europeus, a assinatura do Tratado de Tordesilhas ocorreu num momento de transição entre a hegemonia do Papado, poder até então universalista, e a afirmação do poder singular e secular dos monarcas nacionais – uma das muitas facetas da transição da Idade Média para a Idade Moderna.
Na altura em que foi assinado, o Tratado de Tordesilhas garantia a Portugal o domínio das águas do Atlântico Sul, essencial para a manobra náutica então conhecida como volta do mar, empregada para evitar as correntes marítimas que empurravam para o norte as embarcações que navegassem junto à costa sudoeste africana, e permitindo a ultrapassagem do cabo da Boa Esperança.
Nos anos que se seguiram Portugal prosseguiu no seu projecto de alcançar a Índia, o que foi finalmente alcançado pela frota de Vasco da Gama, na sua primeira viagem de 1497-1499.
Com a viagem do nosso conhecido Pedro Álvares Cabral à Índia, a costa do Brasil foi atingida (Abril de 1500) pelos Portugueses, o que séculos mais tarde viria a abrir uma polémica historiográfica acerca do “acaso” ou da “intencionalidade” da descoberta.

PORTUGAL - Households Debt to Income

PORTUGAL - Unemployment Rate

PORTUGAL GDP Annual Growth Rate

Portugal Economic Outlook

Detailed GDP data confirmed that the economy grew at a solid rate in the final quarter of last year, propelled by a surge in export growth.

Available information for the start of 2018 suggests that the solid momentum spilled over into the new year. Industrial production growth gained steam in January, and the unemployment rate edged down to a multi-year low in the same month.

The economy staged an impressive turnaround from crisis in recent years, and growth surged to a nearly two-decade high in 2017, in part thanks to a thriving tourism sector.

Although high public debt levels remain a cause for concern, the government has taken steps to reduce imbalances.
In March, the European Commission removed Portugal from its list of countries with excessive economic imbalances.

Portugal Economic Sentiment Chart

Portugal Fixed Investment Forecast

It's expect fixed investment to increase 4.3% in 2018, which is up 0.5 percentage points from last month’s forecast, and 4.0% in 2019.
Experts expect private consumption to grow 2.0% in 2018, which is up 0.1 percentage points from last month’s forecast, and 1.7% in 2019.

Portugal: Consumer confidence and economic sentiment improve in March

According to the recent survey of consumer sentiment released by the National Statistics Institute (INE) on 27 March, consumer confidence shot up to 2.8 points in March from 1.6 points in February. It moved further up from the critical zero-point threshold that separates optimism from pessimism; the indicator has been in optimistic territory since April of last year.
Underpinning the improvement in overall sentiment was consumers’ more favorable outlook on their personal financial situation in the coming 12 months, along with more optimism regarding unemployment over the same period.
An upturn in these sub-components more than offset slightly more pessimistic views on the general economic situation and savings ability over the next 12 months.

The overall economic climate indicator edged up to 2.1 points in March after remaining stable at 1.9 points in the preceding three months.
There was an upturn in economic sentiment in the construction and public works sector owing to improved outlooks on current order books and employment over the next three months.
On the other hand, business sentiment in the manufacturing sector moderated slightly over less optimism on stocks of finished goods and production in the next three months.
The services sector also registered more downbeat sentiment over the business situation and demand in the next three months. Meanwhile, sentiment in the trade sector remained unchanged from the previous month.

Portugal: IMF Executive Board Concludes Sixth Post-Program Monitoring


On February 21, 2018, the Executive Board of the International Monetary Fund (IMF) concluded the Sixth Post-Program Monitoring of Portugal and considered and endorsed the staff appraisal on a lapse-of-time basis.  

Portugal’s repayment capacity is expected to be adequate under the baseline. With improved market access and sovereign outlook and ratings, as well as additional early repayments to the Fund in 2017, risks to repayment capacity have moderated significantly since the last PPM.

The Portuguese economy has strengthened. Supported by a benign external environment, job-rich growth has gathered momentum since late 2016. The headline fiscal balance continued to benefit from stronger growth, controlled budget execution, and falling interest costs, with the 2017 deficit target of 1.4 percent of GDP likely to have been met with some margin. Financial stability has also improved with various bank capital augmentations and the sale of Novo Banco in 2017 while banks have also reduced their NPLs and returned to modest profitability. Growth is projected at 2.2 percent in 2018. Downside risks in the near term are mostly external in nature and appear moderate.

Executive Board Assessment
The Portuguese economy has continued to strengthen. Supported by a benign external environment, job-rich and broad-based growth has gathered momentum since late 2016, contributing to better than anticipated fiscal outcomes in 2017, including the exiting from the European Commission’s excessive deficit procedure. Financial stability also improved in the last year. Downside risks in the near term are mostly external in nature and appear moderate.

Portugal has further improved its access to financial markets. Portugal maintains prudent liquidity buffers, and its sovereign debt has become eligible for inclusion in several international bond indexes, which should help support it even as the ECB’s asset purchase program is eventually wound down. Portugal’s capacity to repay the Fund is adequate in the baseline and robust to the risk scenarios in the DSA. In fact, owing to substantial early repurchases to date, no repurchases are due until 2021.

Despite the recent positive economic developments, important crisis legacies remain. The nonfinancial private sector’s debt is large (including by European standards) and remains a source of vulnerability. The still large stock of bad loans on banks’ books constrains their ability to provide new credit for investment. Public debt, at 126 percent of GDP, is the euro area’s third largest. While the public debt ratio is expected to decline to 108 percent of GDP by 2023, this ratio would still leave Portugal vulnerable to unexpected rises in interest rates, the wind-down in the monetary stimulus of the last few years, and cyclical downturns in Portugal and its trading partners.

Favorable borrowing conditions and the economic upswing provide an auspicious opportunity for an even faster reduction of public debt. Structural consolidation in the primary fiscal balance remains essential to keep public debt on a firmly downward trajectory over the medium-term. An adjustment focused on durable expenditure reform is likely to prove more sustainable and supportive of growth. The authorities should be cautious about permanent increases in spending that might reduce the flexibility of public expenditure when cyclical conditions change. Such caution is especially important in relation to decisions that may affect the trajectory of the government wage bill in coming years.

Banks will need to continue strengthening their business models and cleaning their NPLs. Although financial stability has improved over the past year, the high level of NPLs limits banks’ internal capacity to generate stronger returns and increase their capital. Also, some upcoming regulatory changes in the euro area, although aiming to boost resilience, could affect some banks’ funding structure and costs. Banks’ improved financial results in 2017 are encouraging, as is the ongoing implementation of ECB guidance to banks on NPLs. Continued efforts in these areas, including by improving business models and cost efficiency, so banks can generate new capital from their own profits, are necessary to ensure that they remain resilient and better support the economy. New initiatives to further improve the legal framework to support the debt restructuring of viable but distressed debtors and the recovery of collateral, including through out-of-court mechanisms, need to be implemented and closely monitored. In addition, there is a need to monitor carefully developments in the housing markets. Macroprudential authorities should also stand ready to take additional macroprudential measures if needed to prevent the build-up of imbalances and to strengthen the resilience of banks and borrowers.

Raising the economy’s growth potential and resilience to shocks will also require further structural reforms and higher investment and productivity. For the economy to absorb negative shocks and adapt to new opportunities, a flexible labor market is key. Flexibility needs to be preserved even as an environment with more stable jobs is sought. Investment needs to increase substantially to raise the economy’s medium-term growth potential. Preserving external balance while raising investment requires strengthening national saving rates as well. Along with ongoing initiatives to develop human capital, structural reforms should include efforts to continue improving the business environment.

Portugal: Selected Economic Indicators
(Year-on-year percent change, unless otherwise indicated)
					Projections
			2016	2017	2018	2019
Real GDP			1.5	2.6	2.2	1.8
Private consumption			2.1	2.2	2.0	1.6
Public consumption			0.6	1.1	0.2	-0.1
Gross fixed capital formation			1.6	8.7	8.1	5.1
Exports			4.1	7.0	6.6	4.5
Imports			4.1	7.5	7.0	4.5
Contribution to growth (Percentage points)
Total domestic demand			1.6	3.0	2.7	1.9
Foreign balance			-0.1	-0.4	-0.4	-0.1
Resource utilization
Employment			1.5	3.1	1.3	1.1
Unemployment rate (Percent)			11.1	9.0	7.8	7.2
Prices
GDP deflator			1.4	1.6	1.5	1.5
Consumer prices (Harmonized index)			0.6	1.5	1.5	1.6
Money and credit (End of period, percent change)
Private sector credit			-3.7	-1.5	0.1	0.8
Broad money			-0.4	3.7	3.2	2.8
Fiscal indicators (Percent of GDP)
General government balance			-2.0	-1.2	-1.1	-0.9
Primary government balance			2.2	2.7	2.6	2.6
Structural primary balance (Percent of potential GDP)			2.9	2.7	2.4	2.0
General government debt			130.1	125.7	121.7	118.4
Current account balance (Percent of GDP)			0.7	0.4	0.2	-0.1
Nominal GDP (Billions of euros)			185.2	193.0	200.2	206.8
Sources: Bank of Portugal; Ministry of Finance; National Statistics Office (INE); Eurostat; and IMF staff projections.