OECD Economic Surveys: Portugal

Every 18 months
1999-0405 (online)
1995-3348 (print)
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OECD’s periodic surveys of the Portuguese economy. Each edition surveys the major challenges faced by the country, evaluates the short-term outlook, and makes specific policy recommendations. Special chapters take a more detailed look at specific challenges. Extensive statistical information is included in charts and graphs.

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OECD Economic Surveys: Portugal 2017

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06 Feb 2017
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Portugal’s economy has gone through a gradual recovery from a deep recession. A wide-ranging structural reform agenda has supported the recovery and the ongoing reduction of imbalances built up in the past. Raising investment will underpin the ongoing rebalancing of the economy and a stronger export sector. Incentives for new capital investments could be strengthened by improvements in judicial efficiency, administrative reform, product market regulation reforms or lower labour costs. Removing non-performing loans from bank balance sheets would enhance banks’ ability to provide new credit to firms. Addressing bottlenecks in insolvency procedures and opening up new sources of financing would also boost private sector investment. Overcoming a legacy of a low skilled labour force is key for higher living standards. Despite remarkable progress, the education system could do more to raise skill levels and reduce the link between learning outcomes and socio-economic backgrounds. The high share of early school drop-outs and frequent use grade repetition could be reduced by shifting resources towards primary education and students at risk and improving teacher training and exposure to best practices. Unifying the current fragmented Vocational Education and Training (VET) system into one dual VET system, and strengthening monitoring and evaluation could raise its effectiveness to meet the labour market needs and ability to contribute to a more skilled society. Efforts need to continue to raise the skills levels of the low-qualified adult population.


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  • Basic statistics of Portugal, 2015

    This Survey is published on the responsibility of the Economic and Development Review Committee of the OECD, which is charged with the examination of the economic situation of member countries.The economic situation and policies of the Portugal were reviewed by the Committee on 24 October 2016. The draft report was then revised in the light of the discussions and given final approval as the agreed report of the whole Committee on 15 November 2016.The Secretariat’s draft report was prepared for the Committee by Jens Arnold and Sónia Araújo under the supervision of Pierre Beynet. Research assistance was provided by Desney Wilkinson-Erb, Corinne Chanteloup, Gabor Fulop and Daniela Crosera and secretarial assistance was provided by Sylvie Ricordeau and Amelia Godber.The previous Survey of the Portugal was issued in October 2014.

  • Executive summary

    Calculations based on OECD Economic Outlook: Statistics and Projections (database).

  • Assessment and recommendations

    Portugal has undertaken an ambitious structural reform programme since 2011. Reforms have spanned across a wide range of policy areas, product markets, labour markets, taxes, regulations and the public sector. These reforms have supported a gradual recovery of the Portuguese economy, with additional tailwinds resulting from highly accommodative monetary policy and low oil prices.

  • Progress in main structural reforms

    This table reviews action taken on recommendations from preceding Surveys. Recommendations that are new in this Survey are listed in the relevant chapter.

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  • Expand / Collapse Hide / Show all Abstracts Thematic chapters

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    • Raising business investment

      In the context of a strong recession from which the economy only emerged in 2014, total investment in Portugal has been low, reducing the economy’s growth potential. Without stronger investment, growth performance is bound to decline over the next years, but raising investment also matters for wage and productivity developments. Low investment is related to both financing constraints and a lack of competitiveness. Many Portuguese corporates are heavily indebted and are facing strong deleveraging needs, which places strong limits on their capacity to invest, while banks’ lending capacity may be curtailed by large amounts of non-performing loans. The regulatory stance could be used to strengthen incentives for banks to resolve long-standing NPLs, in combination with public support for banks’ efforts to offload legacy loans from their balance sheets. The costs of doing so could be reduced by improvements in insolvency rules which are vital for the recovery values of collateral. Stronger investment incentives could result from a better business climate, possibly as a result of further efforts to simplify dealing with the licenses, the public administration and the judicial system. Reducing entry restrictions in professional services would be one way to improve access to non-tradable inputs, which affect the competitiveness of Portuguese firms, as would be further efforts to reduce rents in the electricity sector or stronger competition in the ports sector. Implicit barriers to the entry of new firms, which often turn out to invest strongly as they grow, could be reduced through reforms in wage bargaining mechanisms and changes in the support measures for research and development.

    • Raising skills

      Despite significant progress made, improving skills remains one of Portugal’s key challenges for raising growth, living standards and well-being. Upskilling the adult population remains a priority and lifelong learning activities should focus more on the low skilled. While active labour market policies have increased their training content in recent years, spending per unemployed is still low. A systematic monitoring of the different programmes would allow concentrating resources on the policies that are more effective in raising skills and employment prospects. In the education system, successive increases in compulsory education have not eliminated early school leaving, and a significant share of youth is left without completed secondary education, thus facing poor labour market prospects and a risk of falling into poverty. Another challenge for the education system is to reduce the link between learning outcomes and socio-economic backgrounds. This could be achieved by providing earlier and individualised support to students at risk of falling behind, strengthening teachers and principals training and exposure to best practices, and creating incentives to attract the more experienced teachers to disadvantaged schools. Vocational education and training (VET) has received less attention than general education until recent years and has suffered from fragmented management. This has curtailed the employment prospects of youth not wishing to pursue tertiary education. Establishing a single VET system and reinforcing work-based learning in companies would address this issue. Tertiary education has expanded considerably over recent years but could have a stronger focus on labour market needs, including by developing tertiary technical education. Enhanced support for business research activities could be coupled with strengthening management skills and the ties between businesses and researchers, for example by creating incentives for academics to co-operate with the private sector.

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