Hello all,
According to the new Summer University at my Social Democrat Political Party in Portugal, António Borges provided his opinion.
Former President of INSEAD MBA Programme, António Borges is an Portuguese political reference nowadays.
Firstly he asked for the main reasons of Portuguese current economic situation:
Answers...
- External Deficit (Import-Export balance)
- External Debt (Debts emitted from portuguese institutes by abroad, mainly is bank credits)
With an constant external deficit, the external debt is growing in consequence...
External debt, in case of crisis, should be great, because involves investment.
However the portuguese case is not the current situation.
Today, the external debt is 100%.
Means that 1 all year of portuguese production is not enough to respond to all debts needs.
So, why Portugal still receive external finance amounts?
Not only Portugal is in the Euro zone but, mainly, because Portugal has real guarantees.
Every day, Portuguese State is having more debts... in consequence is being weaker.
How to decrease External portuguese Debt?
We have to increase the External Balance. EXPORT-IMPORT
This is the principal case:
EXPORTATION-IMPORTATION = PRODUCT (GDP)- (NATIONAL CONSUMPTION + INVESTMENT + PUBLIC CONSUMPTION)
A - We have to be exigent to explore our resources.
B - To increase the exportation, we need also to increase the productivity and external competition.
C - Concerning the expenditures try to give central attention
Portuguese emigrants are actually really productive comparing to the Portuguese people in Portugal. Why? Is just a pure consequence of national environment.
Portuguese saving tax is very low and one of the biggest issue.
USA has a lower saving tax as well, for example, but the family concept to give the saving to them own kids is really low.
One curiosity, Portuguese investment is actually high.
Portugal is full of white Elephants. The central national question is the efficiency.
Education was centred as an issue, however Antonio Borges does not agree, giving an example of portuguese emigrants with lower education, they were really productive abroad.
Borges re forced how strong is effect of unemployment in Portugal.
Portuguese GDP is -4% comparing to last year,
We need competitive companies, this is the central point to resolve.
There is no portuguese economy, exists 2 portuguese economies.
Small and middle companies and from other side big companies.
The majority of portuguese companies that are surviving very well are the ones protected from external market. They are called as non-transaction companies.
In the competitive markets, we have the tourism, agriculture and industry.
The majority of the services are in the non-transaction companies and these ones are protected.
Other dramatic trend is the gap between the rich/poor.
According to the OECD-30 only México and Turkey is worst than Portugal. Countries as Romania, Estonia, Lithuania, Latvia and Bulgaria (EU) are not included.
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