Portugal will suffer a “big recession” this year as a result of the COVID-19 pandemic, predicted former state adviser, economist Vitor Bento, Lusa News Agency reported Sunday.
In an interview with Lusa, Bento, who served as State Adviser to former Portuguese President Anibal Cavaco Silva, said that what important now is to know “how long it will last” and what will be “the form of recovery.”
“On other occasions, we could make projections based on more solid bases. This time everything is mobile and the degree of uncertainty is greater,” the economist said.
What worries in the current scenario is that the crisis has two fronts: it will affect both demand and supply, he explained, adding that there was “an interruption of the economic circuit” in this crisis caused by the pandemic.
“People had money, they wanted to buy, but they were unable to go to stores,” he said. Meanwhile, there is the simultaneous shock on the supply side resulting from the “reduction of the labor supply due to illness and confinement.”
He warned that if the isolation measures last up to two months, the effect on productive capacity may be “bearable.” And if longer, it will be “very difficult even for solid companies.”
The state of emergency is in effect in Portugal from March 19 to April 17. President Marcelo Rebelo de Sousa has said that he will ask for an extension until early May.
Bento also said that the country has spent a lot of time “ignoring” its public debt problem.
“A long time ago, many people warned of this fact, a very great vulnerability and that would be felt in particular at a time of an unpredictable crisis,” he was quoted by Lusa as saying.
Portugal closed last year with a public debt equivalent to 117.7 percent of the Gross Domestic Product (GDP).
Regarding the economic recovery, Bento suggested taking advantage of the “opportunity to redirect the national industry itself.”
On the role of the European Union (EU), he said that EU “reacted as it should have reacted” to the economic crisis resulting from the COVID-19 pandemic.
“Europe will eventually find a solution that will not please everyone, but that will be the possible solution,” he said.
As of Sunday, Portugal has reported 16,585 infected cases with 504 deaths. Health authorities said on Saturday that Portugal is “in the plateau phase” of the pandemic. Enditem