light gazing, ışığa bakmak

Monday, February 17, 2014

oh well

no finantial times: (ou: here's what we had been talking about, b.)

Tearful farewells have become a common sight at Lisbon’s Portela airport. Three years of punishing austerity and deep recession have triggered an exodus where an estimated 200 young graduates and other emigrants leave each day.

But nearby, the airport’s busy cargo terminals and bustling shopping malls reveal a less familiar aspect of the painful economic adjustment Portugal is making as part of a €78bn international bailout agreement: record levels of export growth and tourism have helped make the country the surprise hero of the eurozone recovery.

Year-on-year growth of 1.6 per cent in the final quarter of 2013 outstripped every other eurozone member, including Germany, while quarterly growth of 0.5 per cent, topped only by the Netherlands, shattered economists’ forecasts of only a 0.1 per cent increase.

Describing Portugal as the “eurozone’s new growth star”, Christian Schulz, a senior economist with Berenberg, says the EU’s sovereign debt crisis has been the “handmaid of change”, forcing peripheral member states such as Portugal to make “sweeping structural reforms” and improve their export competitiveness.

“Portugal, not Spain, is the biggest positive surprise in the [eurozone] periphery,” according to Ralph Solveen, an economist with Commerzbank. “Unlike in Spain, the unemployment rate has already come down significantly and employment has increased since the spring.”

The national statistics office noted worrying signs that domestic demand was contributing positively to growth in the last quarter for the first time since 2010. This may reflect the impact of previous cuts in public sector pay and pensions that were subsequently overturned by Portugal’s constitutional court. An over-reliance on the domestic market has been seen as one of Portugal’s structural weaknesses but exports are now driving the turnround.

Export growth of 24.2 per cent over the four years to December and a 5.1 per cent contraction in imports have delivered Portugal’s first current account surplus in two decades. Exports now account for 41 per cent of national output, compared with 28 per cent in 2008.

Shoemakers, for example, who use Portela to ship individual pairs to top customers, including British royalty and celebrities such as David Beckham and Madonna, lincreased exports 8 per cent last year, notching up record overseas sales of more than €1.7bn. Over the past fours the sector has expanded 28 per cent, with 1,700 companies exporting 98 per cent of their production.

Once an industry competing on low wages and low prices, Portugal’s footwear companies have transformed themselves by investing in design, technology and branding. In the world of shoes, “Made in Portugal” is now second only to “Made in Italy” in terms of international prestige and the factory prices they command, says Jorge Correia, founder of Helsar, a Porto-based footwear company.

Other sectors are similarly “moving up the value chain”, a strategy long advocated for Portugal but which has only significantly gained traction under the tough three-year rescue programme that Lisbon agreed with the EU and the International Monetary Fund in May 2011. 


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