Growth in an unstable summer in Portugal

BY ANTÓNIO SAMPAIO DE MATTOS

Except for periods of generalized war in the 20th century, there have been few times in the recent history of Europe in which such dramatic scenarios as those we are currently experiencing happened at the same time. The humanitarian crisis, whose precedents take us back to the darkest hours of our memories; the continuing separatist conflict in eastern Ukraine; creeping extremism, shrouded in religion, both inside and outside the borders of Europe, which in turn is on guard against the terrorist threat; and the unparalleled Eurozone financial crisis, which has left deep scars on the already difficult cooperation between the partners.

It is in such a volatile environment that we find Portugal, in full economic recovery after the impact of deep crisis for four long years. The work of balancing public accounts and restoring market confidence started in earnest in mid-2013, once the Portuguese understand well, once again in our history, the seriousness of the situation. We have allowed our Government to show a high sense of responsibility, applying with rigor and courage successive packages of harsh austerity measures, without which we would surely now be very close to the Greek scenario.

The task of stabilizing the deficit of public accounts was Herculean, but it was achieved. Market confidence had been restored and the interest rate on our sovereign debt has fallen. Improvements in financing conditions then began to reach families, who are seeing increased net incomes. This confidence is reflected in the retail trade and was evident in this holiday period, with the continuous demonstration of increased consumption. For businesses, the increase in domestic demand brought a higher level of employment, reflected in the decline in unemployment rates.

We are starting to notice a trend reversal in the real estate cycle as well, with signs of recovery within the wider trend of general economic recovery. We have witnessed in recent months a significant growth in demand for retail real estate properties for acquisition – following the current trend – by international investors especially interested in an attractive risk-return ratio on their investments.

In the shopping center sector, the recovery of the retail real estate sector brought a change in signals from the second quarter of 2013. The Portuguese Council of Shopping Centers has been monitoring with particular acuity this phenomenon, resulting from the analysis of the evolution of traffic and sales rates in Portuguese malls. It continues to register a trend of slightly declining traffic (-0.8%) when comparing the second half of 2015 with the same period of 2014, while sales, comparing the same periods, grew by 4.1%, making it consistent with the uptick in average sales per visit.

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