As I mentioned yesterday, the results of the third EU-IMF mission to Lisbon to assess Portugal’s implementation of its €78bn bailout were to be release today. Amongst mounting speculation that the country is struggling to meet the specified targets, remembering it only met the 2011 targets by using one-off pension transfers from banks to the state , the report appears relatively positive.
The program is on track, but challenges remain. Policies are generally being implemented as planned and economic adjustment is underway. In particular, the large fiscal correction in 2011 and the strong 2012 budget have bolstered the credibility of Portugal’s front-loaded fiscal consolidation strategy. Financial sector reforms and deleveraging efforts are advancing, while steps are taken to ensure that credit needs of companies with sound growth prospects are met. Reforms to increase competitiveness, growth, and jobs have also progressed, although many reforms still await full implementation. The broad political and social consensus that is underpinning the program is a key asset.
Looking ahead, the Portuguese economy will continue to face headwinds. In 2012, trading partner import growth is expected to weaken further, while domestic demand adjusts, and unemployment and bankruptcies are rising. As a result, GDP in 2012 is expected to decline by 3¼ percent, following a fall of 1½ percent in 2011. In 2013, a slow recovery should take hold, mainly supported by private investment and exports. External adjustment is proceeding.
Read more: http://www.macrobusiness.com.au/2012/02/hi-im-from-the-imf-im-here-to-help/
The program is on track, but challenges remain. Policies are generally being implemented as planned and economic adjustment is underway. In particular, the large fiscal correction in 2011 and the strong 2012 budget have bolstered the credibility of Portugal’s front-loaded fiscal consolidation strategy. Financial sector reforms and deleveraging efforts are advancing, while steps are taken to ensure that credit needs of companies with sound growth prospects are met. Reforms to increase competitiveness, growth, and jobs have also progressed, although many reforms still await full implementation. The broad political and social consensus that is underpinning the program is a key asset.
Looking ahead, the Portuguese economy will continue to face headwinds. In 2012, trading partner import growth is expected to weaken further, while domestic demand adjusts, and unemployment and bankruptcies are rising. As a result, GDP in 2012 is expected to decline by 3¼ percent, following a fall of 1½ percent in 2011. In 2013, a slow recovery should take hold, mainly supported by private investment and exports. External adjustment is proceeding.
Read more: http://www.macrobusiness.com.au/2012/02/hi-im-from-the-imf-im-here-to-help/
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