Portugal’s second wind after recession meltdown
Antonio Gaioso Henriques explains how Portugal has bounced back from the 2008 crisis
Antonio Gaioso Henriques, VP of Activo Bank, breaks down the steps the Government of Portugal has taken to reduce the debt to GDP ratio in the country. Through promoting a highly educated and skilled workforce, and an emphasis on exports, Portugal’s economic outlook is looking better than ever.
Portugal’s central bank has issued a rosy outlook for the country’s economy: it’s anticipating 1.6 to 1.8 percent annul growth over the next few years and although it’s debt to GDP ratio is still worrying, the budget deficit is under control. Joining me is Activo Bank’s Antonino Gaioso Henriques. How has this turnaround been achieved?
Antonino Gaioso Henriques: First of all, we have to understand that we had a long period of political stability which made it possible to make structural changes, especially regarding the labour market. We have good infrastructure and we have good labour because our universities and schools rank among the best in Europe – which makes the country and the labour market more attractive to foreign investment. And the government really made a tremendous effort to promote experts from small and mid-sized companies, and our GDP rise has had a strong impact from those experts all over the world.
World Finance: And how has this impacted the banking industry? What trends have you seen?
Antonino Gaioso Henriques: In the beginning of the crisis when there was a liquidity problem for the sector, the interest rates rose a lot. The savings increased substantially, because of the uncertainty the people were facing in the beginning of the crisis. Now days this has passed and with the very very low interest rates closing to zero, people are seeking other types of investments, namely investment funds, bonds.
World Finance: What should be the priorities for ensuring this growth continues through to 2020 then?
Antonino Gaioso Henriques: First of all, the political stability is something that is crucial for the company to continue. The government must continue to promote and support exports from small and mid-sized companies that has been happening so far. Tourism is a very important activity in the country and for sure this will represent more source of revenues.
World Finance: The finance minister is targeting debt to GDP parity by 2020; what is going to be the impact of getting there?
Antonino Gaioso Henriques: As Portugal reaches that debt level there will be an upgrade of the country’s rating and the debt burden will decrease substantially.
World Finance: Portugal is so close to retaining its investment grade rating, is that all that needs to happen?
Antonino Gaioso Henriques: Yes. It’s a very very important factor that will leverage the country’s economy and the financial situation of the country.
World Finance: How much longer do you think it will take?
Antonino Gaioso Henriques: Well I believe that next year it will happen for sure.
World Finance: Antonino, thank you.
Antonino Gaioso Henriques: You’re welcome.