Portuguese economist Ricardo Reis says that the country is at a turning point, which could be “good or bad.”
Addressing business leaders at the Economic Forum in Famalicão, Ricardo Reis, Professor of economics at the London School of Economics, said that 22 years after joining the EU, Portugal was at a turning point, which could work out well for the country or not.
He said Portugal was facing three constraints: ballooning public debt, trade debt and bank debt. But he said these challenges could pave the way for opportunities and it was up to the private sector and exporting companies to continue to grow and up their productivity levels and by doing so increase the country’s wealth.
On the issue of public debt, he said that, “Any financial screw-up would always be followed by a rise in interest rates and there was no room for mad adventures of this kind.”
“There’s no room for intervening models whoever gets elected to power and Portugal can’t afford to tear up international commitments,” he warned.
As to foreign debt and trade imbalances, he said that this was “huge” and that companies had to look to the international market since the internal market is small and incapable of sustaining company growth strategies.
The economist also said that that the fact that Portugal’s bank were largely in the hands of foreigners in itself suggested that protectionism and favoured relationship status were things of the past.
For these reasons, the constraints placed on Portugal would “help avoid the type of growth strategies that has failed in the past which forced the country to adopt strategies of internationalisation, external market expansion and increased competitiveness.”
Ricardo Reis concluded on an optimistic note by saying that, “The last 17 years have been very bad for the Portuguese economy and it is important to admit it which precisely is why we consider that there are great opportunities.”