Portugal’s economy has been on a moderate recovery path since mid-2013 amid rising business and consumer confidence and improving financing conditions. The recovery was initially led by exports but has increasingly become broad-based as private consumption, in particular, has picked up. Labour-market conditions have been improving, with employment increasing and the unemployment rate falling, but the absorption of the large pool of long-term unemployed remains a challenge. Recent labour market improvements are largely the result of a reduced rate of job destruction, while the rate of job creation has increased more moderately.
Portugal is experiencing excessive macroeconomic imbalances. The large stocks of net external liabilities, private and public debt and a high share of non-performing loans constitute vulnerabilities in a context of elevated unemployment. The current account has adjusted to a small surplus. While households' indebtedness has declined, corporate debt is still weighing on firms' performance. Public debt is expected gradually to decline from a very high level. Policy action has been taken regarding the financial sector, access to finance, insolvency procedures, labour market functioning, education and long-term fiscal sustainability. However, policy gaps persist regarding product and services markets, corporate debt restructuring, fiscal issues and selected areas of the labour market.
Read a complete analysis of Portugal's economy in the country report 2016 [2 MB]
2015 recommendations in brief
The Commission has made five country-specific recommendations to Portugal to help it improve its economic performance. These are in the areas of: public finances, pensions and taxation; wage-setting; labour market; financial sector; transport.