António Costa Silva is one of the architects of the so-called Portuguese economic miracle, which has led the country to grow by 6.7% last year, its highest rate since 1987. The Portuguese Minister of Economy and the Sea was in Barcelona this week in an act organized by Foment del Treball and the Spain-Portugal Chamber of Commerce to promote economic relations between Catalonia and Portugal.
What is the secret to the success of your economic model?
We bet on different levers. The first is education. In the nineties only 12.8% of the population had higher education, today we are at 48%, six points above the European average. The other is innovation, with a scientific and university system that works very well. It also highlights the growing attention to intangible assets and patent registration, which has tripled in the last decade.
Portugal has opened up to foreign investment.
Nokia has just set up shop on the outskirts of Lisbon with a center to develop software. In 2022 we will attract investments of 2,500 million euros, 19% of them from the US. In the past there were more call centers, but today 66% of the investments are allocated to installing engineering or software development centers and 23% to new electronics units. And we have managed to combine these vectors with a digitization of the public administration to reduce bureaucracy.
Despite the good progress of the economy, protest demonstrations have been called in his country in the coming weeks.
The cost of living has risen, and these good economic results have sometimes not reached people's pockets. In any case, what is important is the evolution of core inflation, which has fallen for the first time in 16 months. And consumer confidence in Portugal has been increasing for two consecutive months. The confidence index for manufacturing, construction and public works, commerce and services is also on the rise. This year 2023 may be better than we think.
How can economic relations with Spain improve?
60% of the electricity that Portugal consumes today comes from renewable sources and by 2030 we want to reach 80%. So we are going to allocate resources to wind, photovoltaic and wave energy: by the end of this decade we plan to generate about 10 GW in offshore wind.
In this area, we see the possibility of cooperating with Catalan firms. We have another similar problem with Catalonia, which is the conversion of the automobile industry under the new parameters of electric mobility. We have lithium mines in the north of Portugal and the objective is to ensure the value chain of batteries, from extraction, production and recycling, within the framework of a circular model.
The other area of possible cooperation with Catalonia is the economy of the sea. We will have a large center for marine biotechnologies in the north of the country before the end of the year. There is a wide range of marine elements, such as bacteria, algae, sponges, which have an economic application. We can also use recyclable floating islands to produce energy to power aquaculture and sustain algae farming.
In the energy section, Portugal and Spain have joined forces.
It was a mistake to be totally dependent on gas from Russia, we have to diversify. And the Iberian solution has worked, because in Portugal prices have dropped between 18% and 20%. Now many European countries are looking at us to see if they apply that solution. Connections have to be made because there is still no European energy market. This is what we are discussing, not only with H2Med (the channel for green hydrogen that will link Portugal and Spain with the rest of Europe), but also with the export of renewable energy through electrical cable connections. I think that Portugal and Spain can be a kind of power in renewable energy to export to the rest of Europe.
But France resists the H2Med project.
France wants to defend its nuclear industry. I believe that the war in Ukraine shows that the functioning of the European energy market is essential. We will continue to fight to convince our French friends that it is wrong to have such an egotistical perspective.
Your government has decided to change housing policy. Limitation of rents, end of golden visas...
It's not closed yet. We have launched a public debate and now we will see how it goes. Regarding the elimination of the golden visas, I think they played their role, since they brought 6,800 million euros of investment. But most of that investment went into real estate in the big cities, Lisbon and Porto. And we really have a crisis to solve, we need affordable housing for youth, to retain the country's talent.
They have not skimped on social expenses. And without raising taxes.
Last year we approved a package of 6,400 million euros to help families and companies. In September we launched another one of 3,800 million. And we allocate some 1,500 million euros to contain the price of fuel. And all this without raising taxes, thanks to economic growth. In 2011 we had a declining economy and growing debt. And today we have exactly the opposite. Our debt was reduced by 10.5 percentage points in 2022.
Why is unemployment in Portugal half that of Spain?
In 2022, Portugal was able to create more than 44,000 companies, more than 15%, and the number of insolvencies was very low. That means that the economy is managing to resist, to reinvent itself. For the first time, we managed to reach 50% of exports in terms of GDP, three years ahead of schedule. From the metal-mechanic industry, the manufacture of machinery, equipment, textiles, clothing, the component industry, the automobile, all sectors have demonstrated their capacity to increasingly increase exports. I'm going to give you an amazing fact...
Forward.
Much is said about the importance of Latin America for Spain, but you export more to Portugal. And my country sells more to Spain than to France and Germany together.
Is your dependence on tourism also high, like in Spain?
It accounts for 20% of our exports and has grown admirably. In 2022 we reached revenues of 22,000 million euros, 15% above the 2019 record. The number of tourists is more or less similar, with which we are creating more value and with more diversification: the US market has grown more than 93%
