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High inflation and weak global economic conditions have slowed down growth. Despite renewed fiscal support to cushion the impact, household disposable incomes and firm profit margins have yet to recover fully. Implementing the ambitious Recovery and Resilience Plan (RRP) and ensuring fiscal sustainability are key to a sustained recovery.
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Portugal has made impressive strides in raising living standards over recent years (). Solid trend growth from 2013 up until the COVID-19 pandemic reflected the benefits of past structural reforms, strong export performance supported by favourable global economic conditions and solid domestic demand. Employment picked up and the unemployment rate fell from 17% in 2013 to 6% in 2022. Over the same period, the economy increased its reliance on renewable energy sources, such as wind power.
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Health outcomes have improved substantially during recent decades and life expectancy is high compared with other OECD countries. Overall, the universal National Health Service offers good quality-care and has delivered high vaccination rates, while public spending remains contained. However, challenges related to staff shortages and heavy pressures on staff, long waiting lists in the public sector and high out-of-pocket expenditures have been building and were further compounded by the COVID-19 pandemic. This partly reflects a system that remains strongly based on hospital care and has suffered from underinvestment in the years following the global financial crisis. In addition, obesity, a lack of physical activity and high alcohol consumption are weighing on long-term health outcomes, while the ageing of the population will increasingly require more and different healthcare services. The government has initiated a wide-ranging reform agenda through the Recovery and Resilience Plan and the 2022 reform of the National Health Service, with the aim of enhancing the integration of primary, community and hospital care. Reforms will need to address the generally weak budgeting and accountability practices, building on improved information systems and regular evaluations to ensure more efficient spending. Reforming primary care should remain a priority to scale up efficient prevention programmes, promote cost-efficient choices by care providers, improve access for low-income households and limit avoidable hospitalisations.