Portugal’s been “lucky” but for how long? asks IMF economist

The former chief economist of the IMF, Olivier Blanchard, has told a Portuguese news agency that Portugal “has been lucky” despite its poor productivity record.

In an interview with Lusa, Blanchard said, “I think Portugal has been lucky up until now. The country has had acceptable growth and has managed, at the same time, to reduce its annual debt.”
“If Portugal can continue to do that, then it will move forward, but I think it is important to maintain its growth,” he said at the European Central Bank Forum which was held in Sintra this week and ended on Wednesday.
The former chief economist for the International Monetary Fund (IMF) said he had written an article about Portugal in which he had predicted a more difficult scenario for Portugal, but that the country’s performance had been “better than I had anticipated” which was “bad news for me but good news for Portugal” he said.
Blanchard also said that it would be sad if Portugal’s growth now tapered off. “If there was to be a too strong budgetary consolidation that sowed internal demand and slowed economic growth, then I would be worried” he said, adding that: “at this phase Portugal seems able to continue to grow without additional Government measures to support the economy and “while that continues to be the case, growth should continue.”
The French economist, currently working at the Peterson Institute for International Economics, said that the main critical factor for Portugal at the moment is growth and praised the fall in unemployment.
“The good news in Portugal is the fall in the unemployment rate which is excellent news but on the other hand there had not been a significant growth in productivity” he warned which in his opinion has been “awful”.
The Institute for Employment and Professional Training revealed on Wednesday that the number of unemployed was 305,200 in May, the lowest level in 28 years, representing a fall of 12.9% on the same period in 2018.
Asked what Portugal could do to boost the economy and improve the standard of living for its citizens, Blanchard said: “there is no magic bullet. When you want to improve people’s wealth, one of the things required is economic growth.”
“Portugal has to seriously think about how to increase productivity which is the number one priority for the country.”