LISBON: Slow-growing Portugal faces mounting economic challenges and its financial system remains fragile, leaving little room for Lisbon to slow down the pace of its reforms, the OECD warned Monday.
"The main message we want to stress today is that Portugal's reform momentum must continue," OECD chief Jose Angel Gurria told a news conference in Lisbon called to present the Paris-based body's latest economic survey of Portugal.
"There are many pending problems. There is a lot of homework to do," he added.
A minority Socialist government that came to power at the end of 2015 with the backing of the Communists and far-left Left Bloc has set out to reverse some of the austerity measures imposed as part of a 2011-14 international bailout.
It has raised the minimum wage and the lowest retirement pensions, cut crisis-time tax surcharges and reintroduced four public holidays in an effort to return more income to workers and boost demand.
The Organisation for Economic Co-operation and Development predicted growth would remain sluggish as private consumption lost steam. That was because weakening global trade was slowing the pace of job creation, it explained.
The OECD expects the economy to expand by 1.2 percent this year, the same as in 2016, and by 1.3 percent in 2018, a more pessimistic view than recent government estimates.
"Growth has been slow and faces renewed headwinds, posing difficult policy choices, especially for fiscal policy," it said in its report.
"Putting off fiscal consolidation to support growth implies risks as fiscal sustainability remains weak."
The OECD predicts exports will grow less than in previous years, partly due to dampened demand from China and oil-rich Angola, a former Portuguese African colony whose economy is reeling because of the collapse in global crude prices.
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