Collapse in Europe’s GDP spells disaster for Portuguese companies

The Portuguese Enterprise Association (AEP) says that the abrupt fall in economic activity in the first half of 2020 – never before seen in living memory – resulting in a 16.5% contraction in GDP means that talk of an economic recovery is nothing more than a “mirage”.

The AEP states in a communiqué that with a second half fall in GDP of 14.1% and 16.4% overall, it means “as we predicted, we are in a technical recession, as are our main trading partners, that have recorded equally sharp double digit falls in GDP”.
Portugal’s two main export markets France and Spain suffered an even more severe downturn in GDP with Spain falling 18.5% on the previous quarter and 22.1% like-for-like, while France’s economy has contracted 13.8% and 19% respectively and Germany fell 10.1% and 11.7% respectively. Italy’s economy shrank 12.4% and 17.3% respectively.
AEP President Luís Miguel Ribeiro said, “These figures are extremely worrying and unfortunately show that the longed for recovery is still a mirage which is why public authorities need to redouble their attention and efforts is fundamental.”
The AEP stresses the huge importance of economic support measures, namely an extension to the simplified layoff regime under the same model that has been employed to date and which should be extended until the end of the year, as well as other measures of support to meet the extreme lack of cashflow in Portuguese companies.
This means continuing to provide reinforced state-guaranteed credit lines, export credit insurance, various tax measures, as well as well as re-channeling Portugal 2020 funds to companies.
Furthermore, and of huge importance, is the implementation of a flexible labour policy which reflects economic activity.
“It should not be forgotten that supporting companies means supporting wealth creation, maintaining job creation and contributing towards more solid public finances. If nothing is done, and quickly, we run the risk of seeing even more serious national quarterly statistics simply because many companies won’t be able to hold out until then,” said the AEP president.