Good times for Portugal but more work to be done, says Minister

Portugal is enjoying good times with growth in industrial exports at 10%, foodstuffs at 15% and tourism at 19%. But the country’s challenge is to retain Portugal’s young and highly-qualified generation in Portugal and integrate it into the workforce, says Portugal’s Minister of the Economy, Manuel Caldeira Cabral.

Addressing members of the American Club of Lisbon (Tuesday, March 27) Cabral warned that Portugal’s demographic imbalance with an ageing population and continued low birth rate needed to be addressed.

Portugal has one of the lowest birth rates in the European Union, according to official EU statistics. The lowest birth rates were registered in Spain and Italy (1,34 both), followed by Portugal (1,36), Cyprus and Malta (1,37 both) and Greece (1,38).

“We live in a good moment. The economy is growing slightly above the European Union average, while the budget deficit is down to 1.3% both in public and private sectors, with companies reducing their debt while at the same time enjoying an acceleration in investment,” he said.

With an unbalanced demographic ratio and low birth rate Cabral said it was important for Portugal to continue to be an “open society: open to business, investment, to those who want to come to Portugal and live, work, invest or visit.”

This “open and cosmopolitan attitude”, he stressed was not down to successive governments’ policies, rather openness was historically and culturally part of Portugal’s social mentality.

In terms of economic growth Portugal was “replacing the older generation of less qualified workers (+55) with the new generation (25-35) which was highly qualified and 3 times more likely to have a degree. “This is paying dividends,” he added.

“Thirty years ago, there were no Portuguese universities in the league tables of the World University Rankings (500 best higher education establishments). Today there are five” in the Top 100, including Lisbon and Porto – on a par with countries like Ireland and Finland.

Investment grew 13% in 2017, the largest in 18 years, mostly private and FDI, while the annual deficit fell to 1.3%. “There is more revenue and less unemployed and we have no need to increase revenue by raising taxes”, said Cabral.

The current PS socialist government sees technology as the key to Portugal’s development and has launched different programs: Startup Portugal with streamlined fiscal rules and venture capital instruments and matched co-investment funds with foreign investors in technology firms as well as creating a network of incubators. “In terms of fintech we see many startups growing from strength to strength”, he explained.

As to US-Portuguese relations, they are “friendly and long-standing” with Portugal aligned with the US on many matters.

“Our relationship is a stable one with no clouds on the horizon. It’s a relationship that’s here to stay,” said the minister.

Success in tourism and related services, however (+19%), was not responsible for Portugal’s increase in exports (+11%) with increased sales of goods and services to North America, Mexico, Brazil and China.