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“At this time, the State does not have the economic conditions to face all the problems “that will exist”, warns the leader of the Competitiveness Forum in an interview with the Lusa agency, adding that, “no matter how unpleasant it may be”, it will be necessary to stimulate the reaction of people and companies.
“People, in many cases, are going to have to earn a living anyway, because it will not be possible to maintain the support,” he warns.
Pedro Ferraz da Costa even says that he is “surprised by the generosity of the scheme” announced by the Government, which, in extreme cases, when companies register significant losses in billing, employees cannot work and receive more than 80% of their salary, through financial support from Social Security.
The leader of the Competitiveness Forum also doubts, on the other hand, the effectiveness of these supports as measures to stimulate domestic demand.
Despite admitting that the Government finds it difficult to resist pressure from companies and citizens and remembering that the executive has electoral reasons to try to postpone, as far as possible, the harmful effects of the recession, Ferraz da Costa also recalls that families they are saving and not consuming it even though income has not suffered a significant break.
“So far, the rent has practically not fallen. Disposable income has fallen by 0.6%, practically nothing ”because wages have been replaced by public aid, underlines the businessman, who explains that, however, consumption is falling.
“People are not buying because they have less income, but because they fear the future.” For this reason, “I doubt that at this moment, distributing more money has the effect of stimulating the economy,” he added.
The businessman says, on the other hand, that although this support stimulates the economy, this will not be the path that will lead Portugal out of the economic crisis.
“We have to fundamentally increase exports. It will never be the domestic market that will take us anywhere,” he argues.
For now, the leader of the Competitiveness Forum does not see significant improvements in exercise economic situation and eliminates a scenario of rapid recovery.
“There was hope that the third quarter could be the beginning of the recovery,” but “we remain practically at the level we had in the second quarter, which was very low,” he laments.
According to estimates from the Competitiveness Forum, in the third quarter the economy grew between 0.2% and 0.5% compared to the second quarter, which corresponds to a year-on-year fall of between 16.1% and 16.3 %. In other words, concludes the Forum, “the recovery in the 3rd quarter will have been a long way from offsetting the drops in the first two. quarters“.
“Tourism was worse than expected, in fact, since March that, systematically, we are having a reality worse than forecasts. Some European countries are already showing some recovery, but it is also slower than expected and for the moment the most prudent thing is to think that the world, at a global level, did not fall in 2020 as much as was feared, but that the recovery in 2021 will be more slow, ”says Ferraz da Costa.
The businessman recalls, however, that in Portugal there is an additional difficulty, which is the fact that, in Spain, the pandemic be evolving in a very negative way which will make it recover even more slowly.
The Portuguese economic cycle usually reacts a few months after Spain, explains Ferraz da Costa, recalling that Spain had a more pronounced decline than Portugal and that, now, with the worsening of the lockdown “It is going to take a long time to recover and that” is bad for Portugal, he concludes.
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