Portugal remains on the list of countries with “economic imbalances”

  • ECO News e Lusa
  • 26 February 2020

Portugal continues to show "macroeconomic imbalances", mainly due to a slowdown in external adjustment, the European Commission concluded.

The European Commission has kept Portugal on the list of countries with “economic imbalances” after considering that the country has made “limited progress” since last year. Even so, the Commission highlights the “positive economic performance” and the “political effort” that are helping Portugal “to meet some of its challenges.”

“Portugal has made limited progress in addressing the 2019 country-specific recommendations,” says a report made by the European Commission. In that document, Brussels also lists the areas in which Portugal has made “some progress”, such as the level of education of the population, the increase in the number of graduates and the increased efficiency of administrative and tax courts.

Already in the areas where the country has observed “limited progress” are, among others, the improvement of public finances, the financial sustainability of public enterprises, the effectiveness and adequacy of the social security network. However, the worst performance, where the country recorded “no progress”, was observed in reducing restrictions in highly regulated professions.

Also according to the document, Portugal has made progress in correcting these imbalances, namely in terms of debt reduction, both public and private, and also in terms of bad credit, but, at the external level, the international investment position “remains one of the most negative in the EU” and the prospects are that “the external adjustment will slow down substantially.”

In December, the EU executive adopted the Report on the Warning Mechanism, which identified 13 member states that, according to Brussels, deserved to be the target of “in-depth analysis” for presenting economic imbalances, and the conclusions of that analysis were released this Wednesday, as part of the “winter package.”

In view of this performance, the European Commission has put Portugal back on the list of countries with “economic imbalances” – as it did two years ago – alongside eight other Member States: Germany, Croatia, Spain, France, the Netherlands, Ireland, Romania and Sweden. The worst performers are Cyprus, Italy and Greece, which have been classified as countries with “excessive imbalances”. Bulgaria, for its part, was the only one not to see any imbalance pointed out.