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Portugal needs stronger investment to maintain growth and improve living standards

Arnold, Jens, (2017),“Portugal needs stronger investment to maintain growth and improve living standards”, Portugal Desk, OECD Economics Department, 6 February

Since 2012, investment has hardly exceeded the depreciation of the existing capital stock, meaning that growth of the productive capital stock has almost stalled. This is one reason behind the low potential growth of the Portuguese economy, which the OECD currently puts below 0.5%. Without stronger investment, growth performance is bound to decline to such low levels over the next years.

Raising investment also matters for wage and productivity developments. Low investment limits the growth of labour productivity, which represents the wage increases that Portuguese workers can pocket without deteriorating the competitiveness of their companies.

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