Portugal has undertaken an ambitious structural reform programme since 2011. Reforms have spanned across a wide range of policy areas, product markets, labour markets, taxes, regulations and the public sector.

1. OECD ECONOMIC SURVEY
OF PORTUGAL 2017
6 February 2017, Lisbon
http://www.oecd.org/eco/surveys/economic-survey-portugal.htm
Boosting growth and well-being

2. 2
The economy is recovering
Source: Calculations based on OECD Economic Outlook: Statistics and Projections (database).
145
150
155
160
165
170
175
180
185
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
billion EUR
Real GDP

3. 3
The economy is increasingly more open
0
10
20
30
40
50
60
70
80
90
100
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
Evolution of exports of goods and services
% of GDP
Exports
Imports
Exports and Imports
Source: OECD (2016), OECD Economic Outlook: Statistics and Projections (database).

4. 4
Competitiveness has improved
Export Performance measures the expansion of a country’s exports relative to the expansion of import demand from its trading
partners. Improvements in export performance reflect rising market shares in the imports of trading partners.
Source: OECD (2016), OECD Economic Outlook: Statistics and Projections (database).
60
70
80
90
100
110
120
2000 2002 2004 2006 2008 2010 2012 2014
Export performance
Index 2000 = 100
Portugal Germany Italy Spain

5. 5
Unemployment is falling
Unemployment rate, %
Source: OECD (2016), OECD Economic Outlook: Statistics and Projections (database) and Banco de Portugal (2016),
“General Statistics”, BPstat (database).
0
5
10
15
20
2010 2011 2012 2013 2014 2015 2016 2017 2018

6. SOME VULNERABILITIES
REMAIN

7. General government debt, Maastricht definition, per cent of GDP
7
Public debt is high
Source: Calculations based on OECD (2016), OECD Economic Outlook: Statistics and Projections (database).
50
60
70
80
90
100
110
120
130
140
150
2000 2005 2010 2015 2020 2025 2030
Under current plans
Higher interest rate
Lower inflation

8. 8
Corporate debt needs to be
brought down
1. The non-financial sector debt presented includes loans, debt securities and trade credits. Household includes non-profit institutions
serving households.
Source: Banco de Portugal (2016), BPstat Database and ECB (2016), Statistical Data Warehouse, European Central Bank.
70
90
110
130
150
170
190
2008 2009 2010 2011 2012 2013 2014 2015 2016
Private sector debt1
% of GDP
Non-financial corporations Households

9. 9
The banking sector remains
fragile
0
5
10
15
20
25
30
KOR
PRT
ITA
ESP
USA
JPN
MEX
TUR
HUN
FRA
GBR
POL
DEU
CHE
BEL
OECD
CZE
SVK
NLD
GRC
IRL
SWE
Ratio of capital to risk-weighted assets
Per cent, Q2 20161
Regulatory Tier 1 Regulatory
Source: International Monetary Fund, Banco de Portugal and European Central Bank.

10. NPLs as a percentage of total gross loans, Q2 2016
10
Non-performing loans are high
Source: IMF (2016), Financial Soundness Indicators (FSI Database), International Monetary Fund.
0
2
4
6
8
10
12
14
16
18
20
22
KOR
CHE
GBR
SWE
USA
JPN
DEU
MEX
NLD
TUR
BEL
FRA
POL
SVK
CZE
OECD
ESP
HUN
PRT
IRL
ITA
GRC
37

11. Share of non-performing loans, per cent
11
Corporates represent a high share of
NPLs
Source: Banco de Portugal (2016), BPstat Database and ECB (2016), Statistical Data Warehouse, European Central Bank.
0
2
4
6
8
10
12
14
16
18
2008 2009 2010 2011 2012 2013 2014 2015 2016
Non-financial corporations Housing Consumption

12. 12
Investment is weak
Total gross fixed capital formation
40
60
80
100
120
140
160
2000 2002 2004 2006 2008 2010 2012 2014 2016
2000 Q1 = 100
Portugal
Spain
Italy
Euro area¹
1. Euro area countries that are also OECD members (including Latvia).
Source: OECD (2016), OECD Economic Outlook: Statistics and Projections (database).

13. Firms aged 0-2 years-old, as a % of all firms, latest data
13
Start-up rates are low
0
2
4
6
8
10
12
14
FIN
NOR
AUT
DNK
ITA
ESP
CHL
AUS
PRT
LUX
BEL
SWE
HUN
NZL
USA
NLD
GBR
TUR
Source: OECD DynEmp v.2 database; C. Criscuolo et al. (2014), “The Dynamics of Employment Growth: New Evidence
from 18 Countries”, OECD Science, Technology and Industry Policy Papers, No. 14.

14. 14
Young firms contribute more to
productivity growth
-4
-2
0
2
4
6
8
10
12
-4
-2
0
2
4
6
8
10
12
Labour productivity growth Total factor productivity growth
Young Firms Other Firms
Average annual productivity growth, per cent, latest data
Young firms are defined as those aged five years-old or less.
Source: OECD calculations based on data from Integrated System of Business Accounts (Sistema Integrado de Contas, SCIE).

15. 15
Access to financing is the
biggest obstacle to investment
0
1
2
3
4
5
6
7
8
FIN SVK NLD DEU AUT FRA BEL EA ESP IRL ITA PRT GRC
Index scale 1-10
Source: ECB (2016), “Survey on the access to finance of enterprises (SAFE)”, Statistical Data Warehouse, European Central Bank.

16. Sources of investment financing for Portuguese SMEs,
Per cent of firms, first semester of 20161
16
SMEs are still too dependent on bank financing
“Internal funds” covers retained earnings or sale of assets. “Other sources” covers debt securities issued and equity investment .
Source: ECB (2016), “Survey on the access to finance of enterprises (SAFE)”, Statistical Data Warehouse, European Central Bank.
0 2 4 6 8 10 12 14 16 18 20
Other sources
Grants/subsidised bank loan
Internal funds
Other loans
Factoring
Leasing or hire-purchase
Bank loan

17. 17
Additional reforms in the judicial
system are crucial
Source: European Commission (2016), The 2016 EU Justice Scoreboard and Direcção-Geral da Política de Justiça.
0
200
400
600
800
1000
1200
DNK
EST
AUT
POL
HUN
NLD
SVN
FIN
SWE
CZE
LVA
SVK
ESP
FRA
ITA
PRT
2010 2014
Days needed to resolve civil, commercial, administrative and other cases

18. Years required to resolve an insolvency case, 2015
18
The insolvency process is still too lengthy
Source: World Bank (2016), Doing Business 2016: Measuring Regulatory Quality and Efficiency (database) and APAJ (2015),
“Processo Especial de Revitalização”, Turn Analysis, No. 7, 2nd quarter, Associação Portuguesa dos Administradores Judiciais.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
IRL
JPN
CAN
SVN
BEL
FIN
NOR
AUS
DNK
ISL
GBR
AUT
NLD
DEU
NZL
KOR
ESP
USA
OECD
ITA
MEX
FRA
PRT
HUN
ISR
LUX
SWE
CZE
EST
POL
CHE
CHL
GRC
SVK
TUR
A. Years required to resolve an insolvency case
2015

19. Index scale of 0-6 from least to most restrictive, latest data
19
Barriers to competition in
transport sectors are high
Source: OECD (2016), OECD Product Market Regulation Statistics (database).
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
GBR
DEU
SVK
CHE
HUN
SWE
JPN
NLD
BEL
ESP
OECD
CHL
ITA
IRL
CZE
MEX
GRC
POL
KOR
FRA
PRT
TUR
Air Road Rail

20. EUR per thousand kilowatt hours paid by medium sized industrial consumers,
2015
20
Electricity prices are high, hampering
competitiveness
Source: Eurostat (2016), “Electricity prices by type of user”, Tables by Themes.

21. RAISING SKILLS

22. Gap with respect to the United States, per cent, 20141
22
Labour productivity is low
Labour productivity is measured by GDP per hour worked.
Source: OECD (2016b), “GDP per capita and productivity levels”, OECD Productivity Statistics (database).
-80
-60
-40
-20
0
20
40
-80
-60
-40
-20
0
20
40
MEX
CHL
POL
KOR
TUR
EST
HUN
PRT
CZE
GRC
ISR
SVK
SVN
JPN
NZL
ISL
OCDE
GBR
UE
ESP
ITA
CAN
FIN
AUS
SWE
AUT
CHE
DNK
DEU
FRA
IRL
NLD
BEL
NOR
LUX

23. Percentage of working age population having attained at least upper secondary
education, 20151
23
Improving skills is key
1. Working age population: 25-64 years-olds.
Source: OECD (2016), Education at a Glance 2016: OECD Indicators.
0
10
20
30
40
50
60
70
80
90
100
0
10
20
30
40
50
60
70
80
90
100
CZE
SVK
EST
POL
CAN
USA
CHE
LVA
FIN
DEU
SVN
KOR
ISR
AUT
HUN
NOR
SWE
DNK
IRL
GBR
AUS
FRA
OECD
NLD
NZL
ISL
BEL
LUX
GRC
CHL
ITA
ESP
PRT
TUR
MEX

24. 24
Learning outcomes are improving
Source: PISA 2015 Results: Excellence and Equity in Education (Vol. I).
Average of PISA scores in mathematics, science and reading
465
470
475
480
485
490
495
500
505
465
470
475
480
485
490
495
500
505
2000 2003 2006 2009 2012 2015
Portugal OECD average

25. Percentage of the population aged 18 to 24 having attained at most lower secondary
education and not being involved in further education or training, 2015
25
Early school leaving rate is high
Source: Eurostat (2016), "Youth education and training", Eurostat Database.
0
2
4
6
8
10
12
14
16
18
20
22
0
2
4
6
8
10
12
14
16
18
20
22
ESP
ISL
ITA
PRT
HUN
EST
EU
GBR
NOR
BEL
DEU
FRA
LUX
FIN
NLD
GRC
DNK
AUT
SWE
IRL
SVK
CZE
POL
CHE
SVN

26. 26
Grade repetition is too commonly used
0
5
10
15
20
25
30
35
40
0
5
10
15
20
25
30
35
40
ESP
PRT
BEL
NLD
DEU
ITA
USA
OECD
AUT
CAN
AUS
ISR
EST
POL
NZL
SWE
DNK
CZE
SVK
FIN
GBR
SVN
ISL
JPN
KOR
NOR
% of 15-year-old students who have repeated at least one year
Source: OECD (2012), Equity and Quality in Education: Supporting Disadvantaged Students and Schools.

27. 27
Inequities in the education
system persist
0
5
10
15
20
25
30
35
2006 2015 2009 2012
Science Reading Mathematics
Portugal OECD average OECD minimum/maximum
% of PISA score variance explained by students’ socio-economic background
Source: PISA 2015 Results: Excellence and Equity in Education (Vol. I); PISA 2012 Results: What Students Know and Can Do
(Vol. I); PISA 2012 Results: Excellence Through Equity (Vol. II); PISA 2009 Results: Overcoming Social Background (Vol. II)
and PISA 2006, Vol. 2: Data.

28. Upper-secondary vocational education and training enrolment rates, 2014
28
The VET system needs a thorough
evaluation
Source: OECD (2016), Education at a Glance 2016: OECD Indicators and OECD (2015), Education at a Glance 2015: OECD
Indicators.
0
10
20
30
40
50
60
70
80
0
10
20
30
40
50
60
70
80
CZE
FIN
AUT
SVK
NLD
SVN
CHE
LUX
BEL
ITA
NOR
AUS
POL
DEU
TUR
PRT
OCDE
SWE
GBR
FRA
DNK
ISR
LVA
MEX
EST
ESP
NZL
GRC
ISL
CHL
HUN
JPN
KOR
CAN
IRL

29. Professional management is insufficiently used
Global competitiveness index ranging from 0 (non-professional) to 7 (professional management),
2014-151
29
Managerial skills remain low
Source: World Economic Forum (2015), The Global Competitiveness Index Historical Dataset 2006-2015.
0
1
2
3
4
5
6
7
0
1
2
3
4
5
6
7
ITA
HUN
GRC
SVN
PRT
TUR
MEX
POL
SVK
ESP
CHL
LVA
KOR
ISR
FRA
CZE
OECD
EST
AUT
ISL
JPN
LUX
DEU
AUS
CAN
GBR
BEL
SWE
USA
DNK
IRL
CHE
NLD
FIN
NOR
NZL

30. % of GDP, latest data
30
R&D expenditures are low
Source: OECD, Main Science and Technology Indicators database.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
CHL
MEX
GRC
SVK
POL
TUR
NZL
ESP
LUX
PRT
ITA
HUN
EST
IRL
CAN
GBR
NOR
ISL
CZE
NLD
AUS
FRA
OECD
SVN
BEL
USA
DEU
CHE
DNK
AUT
SWE
FIN
JPN
ISR
KOR

31. As a percentage of product and/or process-innovating small and medium sized
enterprises (SMEs), 2010-12
31
Cooperation between SMEs and
research institutions is low
Source: OECD (2015), OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society.
0
5
10
15
20
25
30
0
5
10
15
20
25
30
CHL ITA TUR LVA PRT ISR POL SVK FRA NLD ESP DNK CZE EST KORDEUNORHUNSWEGBR JPN BEL GRC AUT FIN SVN

32. MAIN RECOMMENDATIONS

33. • Maintain momentum for structural
reforms, in conjunction with a continuous
ex-ante and ex-post evaluation of reforms.
• Continue gradual fiscal consolidation to
ensure the decline of public debt without
jeopardising the recovery.
33
Macroeconomic Policies

34. • Strengthen current regulatory incentives for reducing
non-performing loans (NPLs), including through
write-offs and sales.
• Support the development of a market for distressed
debt, notably through the creation of asset
management companies.
• Improve the workings of insolvency rules by:
– reconsidering the privileged treatment of public creditors
– enlarging the scope for simple-majority decisions among
creditors
– shortening out-of-court settlement procedures.
34
Recommendations to reduce NPLs
and the corporate debt overhang

35. Recommendations to improve the
business climate and raise investment
• Revise land use regulations and limit discretionary
powers of municipalities in licensing procedures.
• Ease entry requirements in professional services.
• Further reduce trial length and the backlog of pending
court cases by expanding court capacity and assigning
specialised judges to specialised courts.
• Phase out electricity generation guaranteed prices sooner
than currently planned.
• Improve the efficiency of ports.

36. Recommendations to raise skills
• Perform a thorough evaluation of all vocational training programs.
• Unify the different systems of vocational education by establishing a
single dual VET system, including work-based learning in companies.
• Provide more and earlier individualised support to students at risk of
falling behind to reduce grade repetition.
• Improve teachers’ training and shift more resources towards primary
and pre-primary education.
• Strengthen the links between research and the business sector through
better incentives for academics to cooperate with industry.
• Raise managerial skills by developing specific training courses for
managers.
• Target life-long learning programmes towards the low-skilled.