Front Matter Page
©1995 International Monetary Fund
December 1995
IMF Staff Country Report No. 95/124
Portugal–Recent Economic Developments
This report on recent economic developments in Portugal was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with this member country. As such, the views expressed in this document are those of the staff team and do not necessarily reflect the views of the Government of Portugal, or the Executive Board of the IMF.
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Front Matter Page
INTERNATIONAL MONETARY FUND
PORTUGAL
Recent Economic Developments
Prepared by Timothy Lane, Maria Carkovic, Charalambos Christofides, and Alessandro Prati (all EU1)
Approved by the European I Department
October 11, 1995
Contents
Basic Data
I. The Real Economy
1. Overview
2. Output
3. Prices
4. The labor market
II. Fiscal Policy
1. Overview
2. Fiscal policy in 1994
3. The 1995 budget and fiscal policy in the first half of 1995
4. Public debt management
5. The privatization program
III. Monetary Developments
1. Interest rate and exchange rate developments
2. Money and credit
3. Monetary policy instruments
4. Financial markets
IV. The Balance of Payments
1. Current account
2. Capital account
3. Commercial policy
Appendix I: The Persistence of Portuguese Unemployment
Appendix II: The Social Security System
Appendix III: Interest Rates
Appendix IV: The Banking System
Appendix V: Fund Relations
Tables
1. Aggregate Demand
2. Contributions of Demand Components to Real GDP Growth
3. Consumption and Investment Indicators
4. Composition and Structure of Gross Fixed Investment
5. Distribution of National Income
6. Disposable Income
7. Savings and Investment
8. Origins of Gross Domestic Product
9. Consumer Prices
10. Population, Labor Force, Employment, Unemployment, and Labor Market
11. Employment by Sector
12. Wage Developments
13. Labor Costs in Manufacturing
14. General Government Expenditures and Revenues (in billions of escudos)
15. General Government Expenditures and Revenues (in percent of GDP)
16. General Government Accounts, 1992
17. General Government Accounts, 1993
18. General Government Accounts, 1994
19. Public Transfers Between Portugal and the EU
20. General Government Financing
21. General Government Accounts, 1995 (Budget)
22. State Tax Revenue
23. Direct Public Debt
24. Interest Rates on Direct Public Debt
25. Privatizations, 1989-95
26. Monetary Survey
27. Sources and Uses of Base Money
28. Credit and Monetary Aggregates
29. Structure of Monetary Aggregates
30. Selected Interest Rates
31. Lending and Deposit Rates
32. Official Interest Rates on Regular Operations of Provision and Absorption of Liquidity by the Bank of Portugal and Remuneration of Minimum Reserve Requirements
33. Balance of Payments
34. Exchange Rate Developments
35. Merchandise Trade and Terms of Trade
36. Geographical Distribution of Trade
37. Composition of Exports
38. Composition of Imports
39. Invisible Transactions
40. Indicators of Tourism
41. Capital Account
42. Foreign Direct Investment
43. Official Reserves
44. External Debt
45. External Debt Service Payments
Charts
1. Aggregate Demand
2. Savings
3. Inflation Rates
4. Price Developments
5. Labor Market
6. General Government Main Indicators
7. Direct Public Debt Levels and Interest Rates
8. Composition of Domestic Debt
9. Indicators of Competitiveness
Portugal: Basic Data
Staff estimates, unless otherwise noted.
The figures for 1992 are not comparable to earlier years due to a change in the survey method.
June.
Wage increases implicit in collective wage agreements during January-July.
August.
Data correspond to the budget.
Maastricht definition.
July.
Includes nonfinancial public enterprises and nonmonetary financial institutions.
Gross of a withholding tax of 20 percent, introduced in May 1989.
| Total area: | 34,312 squara alias | ||||||||
| Population (1993) | 9.35 million | ||||||||
| GDP per capita | US$9,410 | ||||||||
| 1989 | 1990 | 1991 | 1992 | 1993 | 1994 | 1995 1/ | |||
| (Changes in percent, except as otherwise indicated) | |||||||||
| Domestic economy | |||||||||
| Real domestic demand | 3.5 | 5.2 | 4.0 | 4.5 | -2.5 | 1.4 | 2.3 | ||
| Real GDP | 5.7 | 4.1 | 2.3 | 1.7 | -1.2 | 1.0 | 2.8 | ||
| Real foreign balance | |||||||||
| (contribution to GDP growth) | 1.5 | -1.6 | -2.1 | -3.6 | 2.1 | -0.9 | 0.2 | ||
| Employment | 2.3 | 2.2 | 3.0 | -6.3 2/ | -2.0 | -0.1 | -0.4 3/ | ||
| Unemployment rate | 5.0 | 4.7 | 4.1 | 4.1 2/ | 5.5 | 6.8 | 7.0 3/ | ||
| Compensation per worker | 14.0 | 17.7 | 14.2 | 13.7 | 7.9 | 4.7 | 4.8 4/ | ||
| Unit labor costs (manufacturing) | 13.9 | 8.7 | 16.2 | 13.1 | 7.3 | 2.3 | … | ||
| Consumer prices | 12.6 | 13.4 | 11.4 | 8.9 | 6.5 | 5.2 | 4.0 5/ | ||
| GDP deflator | 12.0 | 12.9 | 14.7 | 13.1 | 6.9 | 5.1 | 4.4 | ||
| External accounts | |||||||||
| Export volume | 19.8 | 12.0 | 1.1 | 7.4 | 0.7 | 14.3 | 10.0 | ||
| Import volume | 8.3 | 15.6 | 7.2 | 13.4 | -5.1 | 11.2 | 8.0 | ||
| Export unit value | 6.3 | 3.5 | -0.3 | -2.1 | 2.3 | 4.6 | 3.4 | ||
| Import unit value | 7.8 | 3.4 | -0.9 | -5.4 | 2.8 | 3.0 | 3.4 | ||
| Trade balance (US$ bns, f.o.b.) | -4.9 | -6.8 | -7.9 | -9.4 | -6.7 | -6.7 | -7.1 | ||
| Transfers (net, US$ billions) | 4.5 | 5.5 | 6.0 | 7.8 | 6.7 | 5.4 | 5.8 | ||
| Current account (US$ billions) | 0.1 | -0.2 | -0.7 | -- | 0.8 | -1.1 | -0.7 | ||
| In percent of GDP | 0.3 | -0.3 | -0.9 | -- | 1.0 | -1.2 | -0.7 | ||
| Nominal effective exchange rate | -3.8 | -1.2 | 0.3 | 3.7 | -7.3 | -4.8 | 3.6 3/ | ||
| Real effective exchange rate | |||||||||
| (CPI based) | 4.5 | 6.6 | 6.8 | 9.1 | -4.2 | -2.1 | 5.4 3/ | ||
| Foreign exchange reserves | |||||||||
| (end period, in US$ billions) | 10.0 | 14.5 | 20.6 | 19.1 | 15.8 | 15.5 | 16.0 5/ | ||
| Public finance (in percent of GDP) | |||||||||
| General government balance | -2.3 | -5.4 | -6.5 | -3.3 | -7.0 | -5.8 | -5.8 6/ | ||
| Revenues | 37.8 | 38.5 | 39.3 | 42.6 | 40.5 | 40.6 | 40.9 6/ | ||
| Expenditures | 40.1 | 43.9 | 45.8 | 45.9 | 47.5 | 46.4 | 46.7 6/ | ||
| Primary balance | 4.0 | 3.2 | 1.8 | 4.3 | -0.4 | -- | -0.4 6/ | ||
| Public debt 7/ | … | 68.1 | 69.3 | 61.4 | 66.6 | 69.6 | 71.3 6/ | ||
| Of which: external debt | … | 7.0 | 4.7 | 4.2 | 7.2 | 9.4 | 12.0 6/ | ||
| Financial variables | |||||||||
| Liquidity of residents (L-) | 10.7 | 10.9 | 18.5 | 13.4 | 6.2 | 9.5 | 9.8 8/ | ||
| Domestic credit | 5.4 | 13.5 | 18.6 | 16.4 | 8.6 | 11.0 | 15.9 8/ | ||
| Of which: | |||||||||
| Credit to the general government | -3.2 | 11.1 | 4.1 | 7.1 | 2.3 | 14.9 | 11.3 8/ | ||
| Credit to the private sector 9/ | 11.1 | 14.9 | 26.7 | 20.4 | 11.4 | 10.7 | 17.6 8/ | ||
| Interest rates (end period) | |||||||||
| Overnight rate | 13.8 | 9.5 | 18.6 | 14.2 | 11.2 | 8.9 | 8.6 5/ | ||
| Treasury bill rate (6-months) 10/ | 17.5 | 17.7 | 18.2 | 15.6 | 10.6 | 10.7 | 9.7 5/ | ||
| Deposit rate, 91-180 days | 10.5 | 11.6 | 18.2 | 14.0 | 10.2 | 9.3 | 8.8 8/ | ||
| Lending rate, 91-180 days | 22.7 | 21.8 | 21.2 | 18.9 | 15.7 | 14.7 | 14.2 8/ | ||
Staff estimates, unless otherwise noted.
The figures for 1992 are not comparable to earlier years due to a change in the survey method.
June.
Wage increases implicit in collective wage agreements during January-July.
August.
Data correspond to the budget.
Maastricht definition.
July.
Includes nonfinancial public enterprises and nonmonetary financial institutions.
Gross of a withholding tax of 20 percent, introduced in May 1989.
| Total area: | 34,312 squara alias | ||||||||
| Population (1993) | 9.35 million | ||||||||
| GDP per capita | US$9,410 | ||||||||
| 1989 | 1990 | 1991 | 1992 | 1993 | 1994 | 1995 1/ | |||
| (Changes in percent, except as otherwise indicated) | |||||||||
| Domestic economy | |||||||||
| Real domestic demand | 3.5 | 5.2 | 4.0 | 4.5 | -2.5 | 1.4 | 2.3 | ||
| Real GDP | 5.7 | 4.1 | 2.3 | 1.7 | -1.2 | 1.0 | 2.8 | ||
| Real foreign balance | |||||||||
| (contribution to GDP growth) | 1.5 | -1.6 | -2.1 | -3.6 | 2.1 | -0.9 | 0.2 | ||
| Employment | 2.3 | 2.2 | 3.0 | -6.3 2/ | -2.0 | -0.1 | -0.4 3/ | ||
| Unemployment rate | 5.0 | 4.7 | 4.1 | 4.1 2/ | 5.5 | 6.8 | 7.0 3/ | ||
| Compensation per worker | 14.0 | 17.7 | 14.2 | 13.7 | 7.9 | 4.7 | 4.8 4/ | ||
| Unit labor costs (manufacturing) | 13.9 | 8.7 | 16.2 | 13.1 | 7.3 | 2.3 | … | ||
| Consumer prices | 12.6 | 13.4 | 11.4 | 8.9 | 6.5 | 5.2 | 4.0 5/ | ||
| GDP deflator | 12.0 | 12.9 | 14.7 | 13.1 | 6.9 | 5.1 | 4.4 | ||
| External accounts | |||||||||
| Export volume | 19.8 | 12.0 | 1.1 | 7.4 | 0.7 | 14.3 | 10.0 | ||
| Import volume | 8.3 | 15.6 | 7.2 | 13.4 | -5.1 | 11.2 | 8.0 | ||
| Export unit value | 6.3 | 3.5 | -0.3 | -2.1 | 2.3 | 4.6 | 3.4 | ||
| Import unit value | 7.8 | 3.4 | -0.9 | -5.4 | 2.8 | 3.0 | 3.4 | ||
| Trade balance (US$ bns, f.o.b.) | -4.9 | -6.8 | -7.9 | -9.4 | -6.7 | -6.7 | -7.1 | ||
| Transfers (net, US$ billions) | 4.5 | 5.5 | 6.0 | 7.8 | 6.7 | 5.4 | 5.8 | ||
| Current account (US$ billions) | 0.1 | -0.2 | -0.7 | -- | 0.8 | -1.1 | -0.7 | ||
| In percent of GDP | 0.3 | -0.3 | -0.9 | -- | 1.0 | -1.2 | -0.7 | ||
| Nominal effective exchange rate | -3.8 | -1.2 | 0.3 | 3.7 | -7.3 | -4.8 | 3.6 3/ | ||
| Real effective exchange rate | |||||||||
| (CPI based) | 4.5 | 6.6 | 6.8 | 9.1 | -4.2 | -2.1 | 5.4 3/ | ||
| Foreign exchange reserves | |||||||||
| (end period, in US$ billions) | 10.0 | 14.5 | 20.6 | 19.1 | 15.8 | 15.5 | 16.0 5/ | ||
| Public finance (in percent of GDP) | |||||||||
| General government balance | -2.3 | -5.4 | -6.5 | -3.3 | -7.0 | -5.8 | -5.8 6/ | ||
| Revenues | 37.8 | 38.5 | 39.3 | 42.6 | 40.5 | 40.6 | 40.9 6/ | ||
| Expenditures | 40.1 | 43.9 | 45.8 | 45.9 | 47.5 | 46.4 | 46.7 6/ | ||
| Primary balance | 4.0 | 3.2 | 1.8 | 4.3 | -0.4 | -- | -0.4 6/ | ||
| Public debt 7/ | … | 68.1 | 69.3 | 61.4 | 66.6 | 69.6 | 71.3 6/ | ||
| Of which: external debt | … | 7.0 | 4.7 | 4.2 | 7.2 | 9.4 | 12.0 6/ | ||
| Financial variables | |||||||||
| Liquidity of residents (L-) | 10.7 | 10.9 | 18.5 | 13.4 | 6.2 | 9.5 | 9.8 8/ | ||
| Domestic credit | 5.4 | 13.5 | 18.6 | 16.4 | 8.6 | 11.0 | 15.9 8/ | ||
| Of which: | |||||||||
| Credit to the general government | -3.2 | 11.1 | 4.1 | 7.1 | 2.3 | 14.9 | 11.3 8/ | ||
| Credit to the private sector 9/ | 11.1 | 14.9 | 26.7 | 20.4 | 11.4 | 10.7 | 17.6 8/ | ||
| Interest rates (end period) | |||||||||
| Overnight rate | 13.8 | 9.5 | 18.6 | 14.2 | 11.2 | 8.9 | 8.6 5/ | ||
| Treasury bill rate (6-months) 10/ | 17.5 | 17.7 | 18.2 | 15.6 | 10.6 | 10.7 | 9.7 5/ | ||
| Deposit rate, 91-180 days | 10.5 | 11.6 | 18.2 | 14.0 | 10.2 | 9.3 | 8.8 8/ | ||
| Lending rate, 91-180 days | 22.7 | 21.8 | 21.2 | 18.9 | 15.7 | 14.7 | 14.2 8/ | ||
Staff estimates, unless otherwise noted.
The figures for 1992 are not comparable to earlier years due to a change in the survey method.
June.
Wage increases implicit in collective wage agreements during January-July.
August.
Data correspond to the budget.
Maastricht definition.
July.
Includes nonfinancial public enterprises and nonmonetary financial institutions.
Gross of a withholding tax of 20 percent, introduced in May 1989.