Canadian ratings agency DBRS has brought a small ray of sunshine into Portugal’s compounded sense of gloom: the country’s tourism sector “will recover completely” – almost certainly showing this tendency from 2022. Visitors will be back in huge numbers: it all depends on Europe’s vaccination programmes, which the agency admits are running far too slowly.
As vice-admiral Gouveia e Melo, Portugal’s new vaccination task force coordinator, vows to increase the rhythm of administering shots ‘the moment the problems of vaccine supply are sorted’, DBRS stresses this is fundamental to the country’s economic recovery.
Right now, explains ECO online, “the percentage of people totally immunised with two doses of vaccine is residual throughout Europe”.
Says DBRS: “It is only with elevated levels of immunisation that cases of Covid-19 will reduce consistently, allowing authorities in various countries to totally reopen frontiers, and airlines to pick up levels of activity”.
In short, yes, this year will remain difficult – and because Portugal’s economy is so dependent on tourism, yes, these difficulties will delay the country’s full economic recovery in the immediate short-term. But full recovery is coming: it’s ‘in sight’.
“The shock caused by Covid-19 will be temporary and should not result in structural changes within Portugal’s touristic sector”, says DBRS’ latest analysis – admitting nonetheless that “it will inevitably have serious consequences for many workers and businesses – particularly those most exposed to the activity”.
“The principal risk is the potential damage caused to the economy’s supply chain,” the analysis continues, stressing that “the solvency of small and medium-sized companies exposed to the tourism sector and the persistent rise in long-term unemployment” is “particularly worrying”.
This observation ties in with the message given to parliament this week by finance minister João Leão.
Mr Leão warned of the danger of ‘removing support to the economy too quickly’.
2020 actually saw the economy fall by ‘only’ 7.6% (when the government, and indeed the European Commission, had expected worse), he said, while employment “resisted” the effects of the pandemic “in an impressive way”.
“In the State Budget we forecast that unemployment would reach 9%. The success of the policies adopted – lay-off, progressive return – all helped support labour costs”.
Indeed, the latest data points to a rate of unemployment for December of ‘only’ 6.5%.
But this current period of lockdown – with no definitive end yet in sight – has made 2021 a great deal more challenging than anyone ever imagined it would be.
“We will have to review the macroeconomic scenario significantly”, stressed Mr Leão. “And review the budgetary deficit upwards”.
As we went to press on Wednesday economy minister Pedro Siza Vieira was indicating that all support measures in place would be extended.
In answer to questions in parliament he said that in the space of a week since the opening of the support programme for company rents, 5,000 companies had presented candidacies. No payments have yet been made.
Bottom line: “We are disposed to extend the time and widen the dimension of supports to businesses”, said Mr Siza Vieira.