I like this article. Not only because it very clearly intersects macro and micro economy (and we all know how so many economists tend to consider themselves in only one field, forgetting how both of them are actually key for most of the analysis), but because it underlines the importance of competition for the development of a western economy. The under note is really simple - if an economy over invests in non-transactionable goods, it is doomed. It is the stimulus of competition on transactionable goods that ensures the progress and productivity that stimulate sustainable growth. Period.
Wednesday, 14 August 2013
A 1.1% growth of GDP in Q2 vs Q1 of 2013 is a good result for the Portuguese economy and one that should fill our hearts with hope (literally). But we should not take this as a sign that everything is well:
1) GDP evolution is accurately measured only when comparing vs previous year. That means we should be comparing Q2 2013 vs Q2 2012. That is so as each Q has its own dynamics - the best example is Q3, that is impacted by summertime seasonality, which makes "product"go up (people consume more). When we look at Q2 2013 vs Q2 2012, we still got a -2% GDP evolution. And that is not positive.
2) Many of the structural reforms that Portugal needs are still to be done. Which means this positive figure is only capturing the impact of some of the measures already taken (namely in terms of... lower Labor costs, aka, lower salaries) and context (and Germany and France, two of our biggest markets, have just announced higher GDPs than expected). To make growth sustainable we need to do what I have been saying in the past 3 years (at least) - growth strategy, reduced Government weight, leaner judicial system, higher productivity.
So, lets take this figure as a recharge to our hearts, minds and hopes. And lets make sure that we do what is needed to achieve sustainable growth, and (through private investment) reduce the pornographic unemployment levels that Portugal still has.
Posted by Ricardo at 10:42
Monday, 29 July 2013
Everybody knows that the Portuguese economy is choked by high taxes and that is one of the reasons for its slow recovery (by the way, don't dare to think that is the only one...). And a main reason for that is exactly the high level of unproductive bureaucracy and Government footprint in it. But the Passos Coelho Government has been extremely passive and slow at tackling the problem - it should have been one of its first measures, when it still had the voters confidence (and especially since it is known that budget cuts and simplification efforts take at least 1 year to be reflected in sovereign accounting). Additionally, doing it only now is submitting the Portuguese economy to another shock and stretch. But lets not try to dodge the obvious - the Portuguese economy needs to simplify its public administration, severely cutting unproductive expense, redirecting public investment to strategic areas (though nobody knows what they are; another major failure...) and lowering taxes. That is the only way to generate growth and employment (though we would face a short term shock on this area, as we would have thousands of public servants unemployed - and that is a problem on its own, that could have been minimized if this had been done 3 years ago, as it should...).
Posted by Ricardo at 08:51
Friday, 26 July 2013
I think I already said it, and I will say it again - António Barreto is a rare wise voice in Portuguese politics. And the way he clearly states that politicians think that the party is more important than the country and that has terrible costs should be at the core of the political discussions in Portugal - the fact that politicians will simply brush aside his comments is just another side of how corrupt parties have became.
Posted by Ricardo at 11:17
Wednesday, 5 June 2013
They came to my (and I think almost everyone's) attention a couple of months ago when they blocked a number of candidates to mayor positions, based on a possible Constitutional infringement. They blocked them on the Courts, independently of political affiliations. And that was a very good sign.
Now, they are asking for the Portuguese society involvement, in bringing to light possible violations of public management or of citizens rights. They aim to make sure citizens are respected, holding politicians and public entities responsible for the Laws they break. And I can just applaud this.
Posted by Ricardo at 14:05
There are around 4464000 workers in the Portuguese economy versus a population of 11000000. Does anyone think that this is sustainable? We need to steam growth back to reduce unemployment, but also to increase retirement age. It is simple - 40% cannot support 100%. Never!
Posted by Ricardo at 13:58
Sunday, 7 April 2013
Italy's decision to boost their payment terms to improve cash-flow in the economy is a good step - a very good one. Many people claim Southern European economies need subsidies and stimulus packages, but a first step should actually be to clean debts that are paid 1 year later than agreed. The only problem - it deepens the Government's cash flow crisis...
Posted by Ricardo at 19:02