Oecd Economic Surveys.

115 Pages·1994·6.212 MB·English

by  OECD

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19934994
PORTUGAL
ORGANISATIONFORECONOMICCO-OPERATIONANDDEVELOPMENT
ORGANISATION FOR ECONOMIC
CO-OPERATION AND DEVELOPMENT
PursuanttoArticle 1 ofthe Convention signed inParis on 14th
December 1960, and which came intoforce on 30th September 1961,
the Organisation for Economic Co-operation and Development
(OECD)shallpromotepoliciesdesigned:
to achieve the highest sustainable economic growth and
employment and a rising standard of living in Member
countries,whilemaintainingfinancialstability,andthusto
contributetothedevelopmentoftheworldeconomy;
to contribute to sound economic expansion in Member as
well as non-member countries in the processofeconomic
development;and
to contribute to the expansion of world trade on a
multilateral, non-discriminatory basis in accordance with
internationalobligations.
The original Member countries of the OECD are Austria,
Belgium, Canada, Denmark, France, Germany, Greece, Iceland,
Ireland, Italy,Luxembourg,theNetherlands, Norway,Portugal,Spain,
Sweden, Switzerland, Turkey, the United Kingdom and the United
States. The following countries became Members subsequently
through accession at the dates indicated hereafter: Japan (28th April
1964), Finland (28th January 1969), Australia (7th June 1971), New
Zealand (29th May 1973) and Mexico (18th May 1994). The
Commission ofthe European Communities takes part in the work of
theOECD(Article 13oftheOECDConvention).
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©OECD1994
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Table of contents
Introduction 9
I. Recent developments and prospects 11
Recent developments 1 1
The labour market and inflation 16
The outlook to 1995 26
II. Macroeconomic policies 29
Overview 29
Monetary and exchange-rate policy 31
Fiscal policy 37
III. Promoting competition 48
Introduction 48
Forces shaping the evolution of relative prices 50
Rolling back the State presence in the economy 60
Strengthening competitive forces in the private sector 69
The scope for further action 75
IV. Conclusions 77
Notes and references 83
Annexes
1. Supporting material to Part III 88
II. Calendar of main economic events 90
Statiscal and structural annex 93
Tables
1. Recent macroeconomic developments 14
2. Labour-market indicators 17
3. Wage and price developments 19
4. Export market shares 22
5. Trade by regions 24
6. Trade by commodities 25
7. Balance of payments 25
8. Short-term projections 27
9. Money-market intervention and lending rates 33
10. General government accounts 41
1 1. Medium-term targets 45
12. Consumer prices for tradeables and non-tradeables 48
13. Productivity in the business sector 52
14. Weight of public enterprises in total employment by main branches
of activity 64
15. Major privatisations, 1989-1993 65
16. Telecommunications indicators 67
17. The top 5500 European banks 71
Annex
Al. The "sheltered" sector 88
Statistical and structural annex
Selected background statistics 94
A. Expenditure on gross domestic product 95
B. Household appropriation account 96
C. General government account 97
D. Prices and wages 98
E. Civilian employment by sector 99
F. Money supply and its counterparts 100
G. Breakdown by nationality of foreign visitors 101
H. Foreign trade by main commodity groups 102
I. Geographical breakdown of foreign trade 103
J. Balance of payments 104
K. Labour-market indicators 105
L. Public sector 106
M. Production and employment structures 107
Diagrams
1. Macroeconomic performance 12
2. Industrial production and business indicators 13
3. Conjunctural indicators of demand 15
4. Inflation developments 20
5. Real wages, productivity and economic activity 21
6. Indicators of competitiveness and foreign trade 23
7. Exchange-rate and interest-rate developments 30
8. Interest rates 35
9. Monetary and credit aggregates 36
10. Escudo exchange rates 38
1 1. Targets and outturns 39
12. The stance of fiscal policy 42
13. Public debt developments 44
14. Consumer price inflation 49
15. Sectoral labour productivity levels 51
16. The rise in relative service prices 51
17. Real GDP per capita 52
18. Labour productivity growth in the sheltered and open sectors 54
19. Sectoral labour productivity trends 55
20. Trends in real compensation per employee by sector 56
21. Sectoral output price deflators 58
22. Relative price levels in 1990 between Portugal and the EC 59
23. Weight of public enterprises in the non-agricultural business sector 63
24. Planned privatisations in Europe 66
Annex
Al. GDP per capita and relative price levels 89
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BASICSTATISTICSOFPORTUGAL
THELAND
Area(thousandssq.km) 92.0 Majorcities,residentpopulation
inthousands(1991):
GreaterLisbon 1832
GreaterPorto 1 153
THEPEOPLE
Population(1992,thousands) 9345 Civilianemployment 4310
Numberofinhabitantspersq.km 102 (1992,thousands)
Civilianlabourforce(1992,thousands) 4569 Asapercentageoftotal:
Agriculture 11.4
Industry 33.4
Services 55.2
PRODUCTION
Grossdomesticproductin1992 Grossdomesticproductatfactor
(millionofUS$) 71450 costbyorigin(1990,%oftotal):
Grossdomesticproductperheadin 1992(US$); 7646 Agriculture 5.8
Grossfixedassetformationin1992: Industry 37.8
%ofGDP 26.0 Services 56.4
Perhead(USS) 1985
THEGOVERNMENT
Publicconsumption(1992,%ofGDP) 20.2 CompositionofParliament(numberofseats):
Publicinvestment(1992,%ofGDP) 4.2 SocialDemocrats(PSD) 135
(%oftotalinvestment) 16.2 Socialists(PS) 72
GeneralGovernmentcurrentrevenue UnifiedDemocraticCoalition(CDU) 17
1992,%ofGDP 47.0 CenterSocialDemocrats(CDS) 5
NationalSolidarity(PSN) 1
FOREIGNTRADE
Exportsofgoodsandservices Importsofgoodsandservices
1992,%ofGDP 29.0 1992,%ofGDP 37.6
Mainexportsasa%of Mainimportsasa%of
commoditiesexports,1992SITC: commoditiesimports, 1992SITC:
Food,beveragesandtobacco(0,1) 7.1 Food,beveragesandtobacco(0,1) 9.8
Basicandsemi-finishedmaterials(2,3,4) 9.8 Basicandsemi-finishedmaterials(2,3,4) 12.8
Manufacturedgoods(5,6,7,8) 82.9 Manufacturedgoods(5,6,7,8) 75.7
ofwhich:Chemicals(5) 4.2 ofwhich:Chemicals(5) 9.1
Machineryandtransport Machineryandtransport
equipment(7) 21.6 equipment(7) 37.6
THECURRENCY
Monetaryunit:Escudo CurrencyunitsperUSS
averageofdailyfigures:
Year1993 160.7
March1994 174.1
Note; Aninternationalcomparisonofcertainbasicstatisticsisgiveninanannextable.
This Survey is based on the Secretariat's study
preparedfor the annual review of Portugal by the
Economic and Development Review Committee on 15th
March 1994.
After revisions in the light ofdiscussions during the
review, final approval ofthe Surveyfor publication was
givenbythe Committeeon31stMarch 1994.
The previous Survey ofPortugal was issued in
June 1993.
Introduction
Having enjoyed one ofthe fastest expansions in the OECD area since 1987,
Portugal suffered a small fall in GDP in 1993, the first such decline since 1984.
The downturn in Europe has been partly responsible, by weakening exports and
business fixed investment, but domestic demand has also been depressed by high
real interest rates, the squeeze on corporate profits and a deteriorating labour
market. Personal consumption, which had been rather buoyant until late 1992,
has been adversely affected by weaker labour demand, which pushed up unem¬
ploymentto 5.5 percent in 1993. A resumption in economic growth is dependent
upon both a further global decline in interest rates and a revival of exports, but
should get underway in 1994. However, as output growth is likely to remain
below potential for some time, unemployment may climb further.
Weaker activity and falling nominal wage growth have helped the disinfla¬
tion process, reducing the inflation gap between Portugal and the EU to 3 points
by the end of 1993. However, both monetary policy and fiscal consolidation
suffered setbacks in 1993 as the escudo was once again devalued and the budget
deficit dramatically overshot. At nearly 8 per cent of GDP, the general govern¬
ment budget deficit in 1993 was nearly twice as large as projected, reversing the
falling trend ofpublic debt in terms of GDP. The economy is thus faced with an
unbalanced policy mix. While exchange rate stability has remained the key
intermediate target of monetary policy, and interest rates have been allowed to
fall in line with European rates since mid-1993, the scope for future inflation
convergence depends on the achievement ofgreaterpolicy consistency, including
action to enhance competition in the sheltered sectors of the economy.
This Survey begins with an examination of the factors pushing Portugal's
economy into recession (Part I). Macroeconomic policies are analysed in Part II,
with an emphasis both on the effects ofERM realignments and on the budgetary
overshoot. The opening-up of the sheltered sector is the focus of this Survey's