OECD Economic Outlook 69 - Biblioteca Hegoa

122 - OECD Economic Outlook 69
As growth slows, imbalances
should start to be corrected
There are risks to
competitiveness and export
markets
Portugal: Demand, output and prices
1997 1998 1999 2000 2001 2002
current prices
billion Esc
Percentage changes, volume (1995 prices)
Private consumption 11 851.6 6.0 4.6 2.8 2.1 2.4
Government consumption 3 561.1 3.0 3.8 3.8 1.4 2.4
Gross fixed capital formation 4 442.8 8.8 5.4 5.2 6.0 5.3
Final domestic demand 19 855.5 6.1 4.6 3.5 2.9 3.1
a
Stockbuilding 116.5 0.0 0.1 -0.2 0.0 0.0
Total domestic demand 19 972.0 6.1 4.7 3.3 2.8 3.1
Exports of goods and services 5 685.6 7.6 2.5 7.0 7.7 8.1
Imports of goods and services 7 076.1 13.8 7.0 6.5 7.0 7.5
a
Net exports -1 390.5 -2.9 -2.1 -0.5 -0.5 -0.6
GDP at market prices 18 581.5 3.6 3.0 3.2 2.6 2.8
GDPatmarketpricesinbillioneuros 92.7
GDP deflator
Memorandum items
_ 3.8 3.5 2.8 3.8 3.3
Private consumption deflator _ 2.6 2.5 2.9 3.7 3.3
Unemployment rate _ 5.0 4.4 4.0 4.1 4.2
b
Household saving ratio _ 8.2 7.5 7.7 8.1 8.4
c
Current account balance _ -7.1 -9.0 -10.3 -9.7 -9.6
a) Contributions to changes in real GDP (percentage of real GDP in previous year), actual amount in the first column.
b) As a percentage of disposable income.
c) As a percentage of GDP.
Source: OECD.
sidering the non-recurrent exceptional revenues of 2000, this implies a significant
fiscal tightening. The Stability and Growth Programme envisages a deficit of 0.7 per
cent of GDP in 2002. Meeting these targets continues to depend on significant
annual increases in the tax take, which are predicated on the success of measures
aiming to strengthen the fight against tax evasion. But the impact of these measures
is actually uncertain, and even if revenues from better tax compliance do materialise,
stronger measures to improve spending control are also required.
Activity is likely to slow further as consumption decelerates, due to lower
employment growth and fiscal tightening. Export growth may also slow in line with
the cooling of export markets. Investment spending is however expected to remain
buoyant, as European Union transfers are stepped up. GDP growth is projected to
ease to 2½ -3 per cent in 2001 and 2002, and inflation should fall from the second
quarter of 2001 as the increase in domestic oil prices and its pass-through effects disappear
from the index. Nonetheless, the inflation differential with the euro area is
projected to remain above 1 percentage point, partly reflecting the tight labour market.
The unemployment rate is expected to increase only slightly to 4.2 per cent
in 2002, close to its structural level. Even if imports decelerate and the terms of trade
improve, the current account deficit is unlikely to narrow significantly, staying at
around 9½ per cent of GDP in 2002.
The main risk to this scenario arises from the possibility that wages will rise
faster than projected, in which case there could be an erosion of cost competitiveness,
with lower exports and investment and an even wider current account deficit.
Such a development would increase the risk of a sharper slowdown in the future,