2019 OECD ECONOMIC SURVEY OF PORTUGAL

Transcription

1 219 OECD ECONOMIC SURVEY OF PORTUGAL Promoting convergence and wellbeing Lisbon, 18 February

2 Key messages Further progress in improving public finances, reducing private debt and the health of the banking system can improve resilience to shocks Export performance can be enhanced through policies that better enable exporters to innovate and grow The efficiency of the judicial system can be further improved, thereby spurring economic activity 2

3 Economic recovery is well entrenched but further improvements in wellbeing are needed 3

4 The economy is growing after a double dip recession Real GDP y-o-y % changes y-o-y % changes Source: OECD Economic Outlook. 4

5 Unemployment has continued to decline Percentage Unemployment rate Percentage Source: OECD Economic Outlook. 5

6 Domestic demand is now also driving the recovery Annual percentage change 15 Exports Domestic demand Source: OECD Economic Outlook. 6

7 The economic expansion will continue % change Gross domestic product (GDP) Private consumption Government consumption Gross fixed capital formation Exports of goods and services Imports of goods and services Unemployment rate Consumer price index Source: OECD 7

8 Convergence has been limited GDP per capita, percentage of OECD average Source: OECD Compendium of Productivity Indicators 8

9 Wellbeing can be improved OECD Better Life Index C ountry rankings from 1 (best) to 35 (w orst), 217 2% top performers 6% middle performers 2% bottom performers Portugal Environmental quality Personal security Housing Work-life balance 24 Income and wealth 28 Social connect ions 3 Health status Jobs and earnings Education and skills 33 Civic engagement 35 Subjective well-being Source: OECD (217), OECD Better Life Index 9

10 Encouraging fiscal sustainability and green growth 1

11 The public debt ratio is falling, but remains high 14 Gross government debt as a percentage of GDP % of GDP % of GDP Source: OECD Economic Outlook: Statistics and Projections (database). 11

12 Ageing costs will impact public debt 16 General government debt as a percentage of GDP Continued consolidation effort 4 Continued consolidation effort and not offsetting increase in age-related costs 2 Weakening consolidation effort Weakening consolidation effort and not offsetting ageing-related costs Source: OECD, European Commissions, calculations by the OECD Secretariat. 12

13 There are too many VAT exemptions and reduced rates VAT Revenue Ratio Note: The VAT Revenue Ratio is the ratio between the actual value-added tax revenue collected and the revenue that would theoretically be raised if VAT was applied at the standard rate to all final consumption. Source: OECD. 13

14 Public transport is used much less than in other EU countries Percentage of individual car use in total passenger transport, LTU PRT NOR ISL GBR SVN NLD DEU SWE LUX EU FIN GRC ITA BEL DNK ESP FRA LVA EST IRL POL AUT SVK CHE CZE TUR HUN Source: Eurostat. 14

15 Recommendations to improve fiscal sustainability and make growth greener Continue gradual fiscal consolidation. Raise taxes on diesel fuel, and increase energy taxes on coal and natural gas. Encourage public transport use and the development of new shared transport solutions. 15

16 Improving financial stability 16

17 Bank profitability has improved, but remains low Return on Equity (%) 218 Q3 216 Q GRC DEU FIN PRT ITA ISL GBR BEL FRA EU IRL DNK LUX ESP NLD POL EST AUT NOR SVN SVK SWE LTU LVA CZE HUN -4 Source: European Banking Authority (EBA), EBA Risk Dashboard 17

18 Nonperforming loans remain elevated, despite improvements Non-performing loans as a ratio of total outstanding loans, 218 Q GRC PRT ITA SVN HUN IRL POL ESP EU LVA AUT SVK FRA LTU ISL DNK BEL NLD DEU NOR EST CZE GBR FIN SWE LUX Source: European Banking Authority (EBA), EBA Risk Dashboard. 18

19 Personal bankruptcy law is relatively stringent OECD insolvency indicator: Treatment of failed entrepreneurs, CAN TUR USA AUS CHL GBR JPN AUT CHE DNK ESP FIN FRA GRC IRL ITA LVA MEX NOR NZL SVK SVN BEL DEU EST HUN ISR KOR NLD PRT SWE CZE. Source: Adapted from Adalet McGowan et al. (217). 19

20 Court proceedings for credit claims can be long 7 Total Credit claim less than 1 year 1 to 2 years 2 to 5 years more than 5 years Source: Ministry of Justice. 2

21 Recommendations to improve financial stability Continue to monitor NPL reduction plans, translating performance in achieving targets into capital requirements. Make bankruptcy a viable solution for heavily indebted individuals, reducing the time to discharge and exempting more of the debtor s assets from bankruptcy proceedings. Introduce an out-of-court mechanism to facilitate the liquidation of non-viable firms. 21

22 Further raising export performance 22

23 The improvement in export performance has been impressive Export performance, Index 27=1 Portugal Germany Italy Spain Hungary Source: OECD Economic Outlook: Statistics and Projections (database). 23

24 Tourism has been booming Financial services Insurance and pension Percentage contribution to total export growth over the period Intellectual property use Personal, cultural and rec. Source: Bank of Portugal, calculations by the OECD Secretariat. Construction Telecomm. and IT Services Clothing and footwear Wood, cork and paper Other manufacturing Hides, leather and textiles Other services Goods Transportation Transport material Agri-food Machines Chemicals, rubbers Minerals and metals Travel and tourism

25 The economy can still be more outward oriented % of GDP 12 1 FDI stock Exports PRT HUN CZE BEL Source: OECD. 25

26 Most firms are too small to be significant exporters Share of firms with more than 1 employees % % SVK GRC CZE ESP ITA FRA BEL PRT POL SVN SWE NLD HUN ISL FIN LVA IRL EST LTU NOR GBR AUT DNK DEU LUX Source: Eurostat. 26

27 It takes too long to prepare and pay taxes Time to prepare and pay taxes, 218 Hours 3 Hours EST LUX CHE NOR IRL FIN LTU AUS GBR NLD SWE JPN AUT CAN DNK BEL FRA ISL NZL ESP OECD LVA TUR USA KOR SVK GRC DEU CZE SVN ITA ISR MEX PRT COL HUN CHL Source: World Bank Doing Business Indicators. 27

28 Logistics infrastructure can be improved Worse Ranking for logistics infrastructure Better PRT HUN CZE ESP ITA BEL FRA DEU Source: World Bank Doing Business Indicators. 28

29 Improving workers skills is key for raising competitiveness Percentage of individuals that have completed education 6 5 EU Portugal Upper secondary and post-secondary education Tertiary education Source: Eurostat. 29

30 Recommendations for further promoting export performance Simplify the tax system by reducing the use of special provisions and ambiguity in tax language. Ensure that port concession contracts specify a minimum level of investment by the operator and do not renew concessions without opening a new public tender. In awarding port concessions, take into account the price that bidders will charge port users. Target lifelong learning opportunities to the low-skilled, including by collecting information on the private returns to skills and making it publicly available. 3

31 Enhancing judicial efficiency to foster economic activity 31

32 Court proceedings are shorter than before, but still long Average time needed to resolve civil and commercial cases, first instance courts, in days Source: Council of Europe European Commission for the efficiency of justice (CEPEJ) 32

33 The average time to pay is long in Portugal, partly reflecting weak contract enforcement The average time actually taken to pay, Business to business, in days. Source: Intrum (218), European Payment Reports

34 Loan forbearance is common, while collateral enforcement is difficult The forbearance loans ratio as a percentage of total outstanding loans in the corporate sector, Q GRC PRT SVN IRL ITA ESP ISL NOR HUN POL EU DEU NLD AUT DNK BEL GBR SWE FRA FIN EST LUX Source: EBA, Risk Assessment Report December

35 Recent reforms reduced pending proceedings, but court congestion remains significant Number of initiated, terminated and pending proceedings per judge 12 Initiated Terminated Pending Source: Pordata. 35

36 Significant bottlenecks remain in some courts Civil cases, Resolution rate (LHS) cases in stock/number of judges (ratio, RHS) How to read this chart: Court efficiency (measured by Resolution rate which is the number of resolved cases divided by the cases in stock) tends to be low where court resources are relatively scarce. Source: Ministry of Justice and High Council for the Judiciary. 36

37 Regulation in the legal professions is too strict OECD Indicators of regulation in the legal services sector Source: OECD Product Market Regulations Statistics (database). 37

38 Alternative dispute resolution mechanisms can be developed further thousands Number of proceedings in Justice of peace courts vs. in the court system. incoming cases, justice of peace courts (LHS) pending cases, justice of peace courts (LHS) incoming cases, court system (RHS) thousands Source: INE. 38

39 Recommendations for enhancing the judiciary to foster economic activity Increase the managerial autonomy of the courts so that they can effectively allocate resources. Fully analyse the data collected from the information system on court proceedings (CITIUS) so that it allows the courts to identify problematic cases and those that should be prioritised. Set up an independent supervisory body to ensure that regulations in the legal profession are in the public interest. Continue to enhance the capacity of the Public Prosecution Office to address economic and financial crime. Public prosecutors should continue to undertake specialised training in this area. Establish an electronic registry of interests for all government members and senior civil servants that is regularly updated. 39

40 Improving labour utilisation and further reducing poverty 4

41 The incidence of long-term unemployment is still quite high As a percentage of total labour force, 218 Q3 Unemployment rate of which, long-term unemployment GRC ESP TUR ITA FRA LVA PRT FIN SVK LUX SWE IRL BEL LTU EST SVN DNK AUT CHE GBR NOR HUN POL NLD DEU CZE ISL Source: Eurostat Labour Force Survey database. 41

42 Low-skilled people face significant employment barriers Percentage of those unemployed or with weak labour market attachment facing each employment barrier Lack of skills Scarce job opportunities (regress) Health limitations "High" non-labour income "Low" relative work experience No past work experience "High" earnings replacements "High" care responsabilities Source: OECD (218), Faces of joblessness in Portugal. 42

43 Recommendations for improving labour utilisation and reducing poverty Avoid across-the-board rises in hiring subsides, limiting them to those at high risk of long-term unemployment and those at risk of poverty. Expand well-designed vocational training programmes (i.e. Aprendizagem and Cursos de Educação e Formação de Adultos ), so that they reach more of the low-skilled population. Consolidate the two vocational education systems into a single dual VET system with strong workplace training and perform a thorough evaluation of all vocational training. 43

44 For more information Disclaimers: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Follow us on twitter: OECD Economics OECD 44