2004 OECD Economic Surveys: Portugal 2004

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Portugal’s progress towards economic convergence with the rest of Europe has diminished in recent years, and in this 2004 review of Portugal’s economy, OECD recommends stepping up growth through policies that raise human capital, encourage the mobility of the labour force, and facilitate innovation and the diffusion of technological advances. Competition needs to be stiffer and the climate for doing business needs to be further improved. This edition’s special feature covers reform of the health care system.

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The Fiscal Challenge

Reducing the fiscal deficit and securing sustainability of public finances over the medium-term has been the main macroeconomic policy priority since 2002. This is first a response to the European fiscal rules, but, more fundamentally, it reflects a political determination to ensure that Portugal’s catching up will not be jeopardised by recurrent fiscal crises. A more comfortable fiscal situation would support growth by: i) allowing automatic stabilisers to operate fully during downturns; ii) improving confidence; iii) putting the public sector in a better position to respond to the long-term development needs of Portugal (for instance in education); and iv) contributing to a friendlier business environment by improving the efficiency and speed of public services. In turn, stronger growth in the long-term should help contain fiscal ...

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