Portugal improves its economic freedom score

in Business · 12-03-2015 14:22:00 · 0 Comments
Portugal improves its economic freedom score

The world economy is “moderately free,” with a slight rise in economic liberty leading to a third annual global increase, according to the editors of the 2015 Index of Economic Freedom, released this week by The Heritage Foundation and The Wall Street Journal.

Portugal’s economic freedom scoreis 65.3, making its economy the64th freest in the 2015 Index. The rankings are topped by Hong Kong,Singapore and New Zealand, who all had ratings of above 80.
Portugal’s score has been boosted by 1.8 points since last year, with improvements in seven of the 10 economic freedoms led by labour freedom, monetary freedom, and business freedom.
Portugal is ranked 30th out of 43 countries in the Europe region, and its overall score is above the world average.
Portugal came in behind Albania and Cape Verde and was just ahead of South Africa in terms of economic freedom.
According to researchers, a difficult external environment and a domestic banking crisis have not prevented Portugal from advancing its economic freedom.

Over the past five years, it has gained 1.3 points and moved up five spots in the rankings. Improvements in five of the 10 factors have been led by a notable easing of business and labour regulations.
But the report also found Portugal still lags behind other European countries in many areas.
Government spending accounts for over half of the domestic economy, and bailouts of financial firms have severely strained government finances.
“Rigid labour regulations prevent the market from adjusting efficiently to changes in labour demand. The rule of law is generally respected, but budgeting problems have led to backlogs in the court system”, the Heritage Foundation argued.
It further recalls that in 2013, the OECD expressed concern over Portugal’s reluctance to crack down on foreign bribery, particularly in regard to its former colonies Brazil, Angola and Mozambique.
Since 2001, Portugal had officially acknowledged only 15 bribery allegations, and there had been no prosecutions. The judiciary is constitutionally independent, but staff shortages and inefficiency contribute to a considerable backlog of pending trials.
The report also expressed praise for rules regarding the formation of private enterprises which are now more straightforward. There is no minimum capital requirement for launching a business, which now takes less than five days and three procedures on average. Measures to reduce severance payments and revise the unemployment insurance system have been implemented. The state maintains a generous mortgage subsidy programme to encourage homeownership.
The overall financial system in Portugal has endured uncertainty without significant disruption, but banking continues to be under considerable strain, highly dependent on liquidity support from the European Central Bank.
Launched in 1995, the Index evaluates countries in four broad policy areas that affect economic freedom: rule of law; limited government; regulatory efficiency; and open markets. There are 10 specific categories: property rights, freedom from corruption, fiscal freedom, government spending, business freedom, labour freedom, monetary freedom, trade freedom, investment freedom and financial freedom. Scores in these categories are averaged to create an overall score.



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