The Portuguese economy would have to grow, on average, between 3.1% and 3.8% to join the top half of the richest countries in the European Union, concludes a study by the Faculty of Economics of the University of Porto. Reaching that pace requires structural reforms that boost GDP, the authors argue. Without a change in policies, Portugal will sink even further in the table, falling to 25th position, according to a report by ECO.

The study by the Office of Economic, Business and Public Policy Studies (G3E2P), at the Faculty of Economics of the University of Porto (FEP), argues that the simple growth average of European Union (EU) countries be adopted – or, if superior, the median – “as a new strategic base reference to overcome, constituting a primordial structural reform”.

The use of the simple average is justified by the fact that the growth of the bloc of 27, as a whole, largely reflects the high weight of the three largest economies (Germany, France and Italy), “which have long been one of the less dynamic.” This reduces the growth of the EU and even more so of the Euro Zone, the latter often used as a reference by the Bank of Portugal.

Higher standard of living

“To achieve a higher standard of living and population as quickly as possible requires ambition and consistent policies in terms of economic growth, which implies, from the outset, choosing a benchmark with an ambitious and appropriate growth dynamic to compare ourselves to,” defend economists Nuno Torres and Óscar Afonso, authors of the study that is part of the second chapter of the publication Economy and companies: trends, perspectives and proposals. The latter is director of the FEP and participated in the preparation of the PSD’s economic program.

By adopting this benchmark, Portugal would, in the long term, be able to reach not only the bloc’s simple average, but also enter half of the countries with the highest standard of living by 2033, in 13th position. It is currently in 20th place.

Getting there requires an annual economic growth rate of between 1.4 and 1.5 percentage points above the simple average of EU countries over the next decade, using projections for the evolution of potential GDP from the European Commission’s Aging Report 2024. In other words, the economy would have to grow 3.1% per year.