The Country-specific Recommendations are documents prepared by the European Commission for each country, analysing its economic situation and providing recommendations on measures it should adopt over the coming 18 months. They are tailored to the particular issues the Member State is facing and cover a broad range of topics: the state of public finances, reforms of pension systems, measures to create jobs and to fight unemployment, education and innovation challenges, etc. The final adoption of Country-specific Recommendations prepared by the Commission is done at the highest level by national leaders in the European Council.
The recession deepened in the final quarter of 2012 and GDP contracted by 3.2% last year, more than previously expected. Unemployment was also higher than expected, at 17.3% in the last quarter of 2012, and is forecast to peak at 18.5% in 2014. Meanwhile, the rebalancing towards more export-oriented growth continues at a good pace and the current account is projected to be balanced in 2013 for the first time in more than 40 years.
The implementation of the Economic Adjustment Programme is broadly on track. Significant fiscal consolidation has been achieved since the start of the programme, the stabilisation of the banking sector is progressing according to schedule and major structural reforms are being implemented.
Nevertheless, significant challenges remain, and the authorities will need to engage in further fiscal consolidation to put public finances on a sustainable footing and tackle the rapid increase unemployment, in particular among the young and older workers. Households and the corporate sector need to continue the ongoing process of deleveraging, which is a major prerequisite to restore confidence and set the conditions for sustainable economic growth. In addition, significant structural reforms are still needed for instance to further reduce excessive costs in the energy sector and in ports and to lower the administrative and licensing barriers to doing business.
2013 European Commission's recommendations for Portugal
The European Commission, European Central Bank and the International Monetary Fund agreed an Economic Adjustment Programme with the Portuguese authorities in May 2011. In order to avoid duplication with reform measures set out in the programme, the Commission has not issued any additional recommendations to Portugal in the framework of the European Semester.