Interview: Portugal growth to be lower than gov't initial estimations: expert

Portugal's growth is most likely to be lower than the government's initial estimations, Pedro Pita Barros, professor of economics at Universidade Nova de Lisboa, told Xinhua on Thursday.

While the Socialist government believed the economy would expand by 1.8 percent this year and next, Pita Barros wasn't as optimistic.

Barros said there was risk of a second bailout in the future, but that he didn't see this happening in the coming months.

"The government is making a delicate balance between its electoral platform and the need of budget management. So far, the numbers provided seem in line with meeting the budget target," he said.

He also pointed out that the current Socialist government's focus in raising consumption "cannot be the solution for a decade-and-a-half-long economic slowdown."

The country's main challenge now is to increase productivity, he said.

This can be done through exposure to international markets, investment in tradable sectors, channelling existing funds into the best projects, creating a stable business environment, and changing labor market rules, he said.

He also said it was necessary to ensure that when businesses fail there is a fast deployment of productive assets, to avoid depreciation of equipment as the courts take a long time to decide.

Barros said the introduction of a new property tax for the rich, as revealed recently, would undermine foreign investment in real estate, and while it would create more equality, he doesn't know to what extent.

The country's unemployment figures have improved, however, Barros said this does not necessarily mean the economy is improving.

"To have the economy improving, we need productivity gains," he explained. "But employing more people may be done in labor-intensive but low-productivity potential growth, with no permanent and sizeable effect on growth."

The center-left Socialist government led by Antonio Costa, and supported by the Left Bloc and Communist Party, has rolled back austerity measures taken after Portugal's 78-billion-euro (87.70 billion U.S. dollar) bailout in 2011.

Costa has insisted he will manage to bring the deficit down comfortably below 2.5 percent of GDP and meet EU commitments, despite the International Monetary Fund (IMF) saying the country's deficit would reach 3.0 percent of GDP this year, and the opposition saying the government has failed.

"I hope it will manage," Barros said. "If it does, I do not expect it to be comfortably or without exceptional measures." Endit