On 3 October, Inês Domingos, Macrometria’s Founding Partner, delivered a brief talk under the title “Crisis for dummies”. The event took place in “Cowork Lisboa” in LX Factory in Lisbon, an open-space for small firms and the self-employed.
Inês gave a brief explanation of crisis’ background with a special focus in Portugal’s debt situation. In Portugal, both private and public external debt are above 100% of GDP and some estimates for public debt for the end of 2012 reach 120%. Not only the amount, but also the quality of debt is a concern. The speaker explained how the very generous mortgage policies by financial institutions led to the subprime crisis and ultimately to creating a systemic risk which strongly deteriorated bank’s balance sheets.
Focusing then on Portugal, Inês revealed her optimism that Portugal will start recovering during 2013, in her opinion. But, by definition, cycles do not solve structural issues, such as weak productivity and competitiveness. Inês said that important reforms are being implemented, namely in the labor market, but more needs to be done, particularly in the non-tradables sector. Anyway, those reforms may take time to produce results.
In this final Q&A part, Inês pinpointed the main challenges for the Portuguese economy, illustrating how hard it is to overcome the public deficit. She explained why fiscal targets initially set in the Portuguese Adjustment Programme are not going to be reached this year and the incapacity of temporary measures, such as last year’s pension funds’ transfer, to consolidate Government’s balance in a sustainable way. She also spoke about entrepreneurship and the role of expectations and confidence in the economic recovery.
The presentation is available here.