Portugal could take more than three years to recover jobs destroyed in pandemic

According to calculations made by Dinheiro Vivo on the basis of projections by the Bank of Portugal, three years minimum will be needed for the country to recover jobs lost during this pandemic year.

In a text which only far down towards the end concedes “high unemployment will be with us for years”, DV explains that Portugal’s central bank estimates employment this year will decline by 2.3%. 

It’s the worst drop since 2013 when the then centre-right government was in the midst of the post-bailout adjustment period. In numbers it means 114,000 jobs have been destroyed.

While the economic situation is obviously expected to recover, it won’t do so – says the central bank – until 2023, by which time (again according to the projections) the number of jobs created will still only be 107,000.

Central bank governor Mário Centeno stressed that the calculations – very much in line with those of the European Central Bank – mean that by the end of 2021 Portugal’s GDP will still be 3.4% below the level pegged at the end of 2019. 

Part of the problem is that Portugal’s recovery is expected to be much slower than forecast six months ago. 

Instead of the projected 5.2% for 2021 (calculated when the economy was coming out of the country’s first lockdown), financial experts are suggesting a recovery in the region of 3.9%.

2022 should be better, says Dinheiro Vivo. The central bank calculates a recovery of around 4.5%.

But with all the restrictions still in place, and a massive vaccination programme only due to start next week and take the best part of the year to cover the most vulnerable, it will take until the beginning of 2022 for economic activity “not to be conditioned” – by which time it should have returned to pre-pandemic levels.

The worst of these calculations are that “even with European funds and non-repayable subsidies, unemployment will increase to 7.2% of the working population this year, and to 8.8% by next.

Says the online, by 2022, relief may only be marginal, possibly bringing the percentage of unemployed down to 8.1%.

And then there’s the ‘uncertainty’ of calculations in general plus the ‘high uncertainty of being dependent on the evolution of the pandemic and the speed of mass vaccination’.

Stresses Dinheiro Vivo everything is based on the expectation that Portugal (as well as the rest of Europe) “will have enough money from Europe to spend on new investments (preferably green) and new technologies”.

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