Portugal: Spending discipline needed
Stronger growth in Europe spurred a pick-up in exports and GDP growth in 2006. The recovery is expected to gain momentum in 2007 and 2008. The significant output gap and high unemployment should lead to a moderation in wage claims and reduce inflation to the euro area average.
It is imperative that the government achieves its fiscal consolidation goals, which will require strong discipline on the expenditure side. This will contribute to long-term improvement in economic performance. Lifting the level of human capital and increasing competition in the domestic market are also essential for raising productivity and improving Portugal’s flexibility to adapt to external shocks.
|Population (000s), 2005||10 563|
|Area (000 sq km)||92|
|GDP (Billion USD), 2005||209.9|
|Life expectancy at birth (Women, Men), 2003 ||80.5, 74.2|
|Total labour force (000s), 2005||5 545|
|Government type||Parliamentary Democracy|
|Indicators||% change unless otherwise indicated|
|Household savings ratio||9.4||9.5||9.7|
|Consumer price index||3.1||2.0||1.8|
|Unemployment rate (%)||7.5||7.4||7.0|
|General government financial balance (% GDP)||-4.6||-3.7||-3.4|
|Current account balance (% GDP)||-8.8||-9.2||-9.9|
No. 258/259, December 2006