Portugal: Selected Issues

July 12, 2019

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Portugal: Selected Issues, (USA: International Monetary Fund, 2019) accessed November 12, 2024

Summary

This Selected Issues paper focuses on cross-country differences in savings rates in advanced European countries. It explores a range of demographic, fiscal and financial factors that could explain why household savings are low in Portugal compared to its peers. Portugal’s household saving rate is lower than those of the average European country. This difference can be explained by Portugal’s lower disposable income, lower financial net wealth, higher old-age dependency ratio, higher government spending on pensions and on social protection benefits, and higher homeownership ratio, as suggested by a comparison against another 14 European countries conducted with the aid of panel regressions. Other factors that could underlie Portugal’s low household saving are the country’s lower education levels, fertility rate, and private pension coverage. Many of these factors are not amenable to simple or direct policy interventions, although some policy initiatives aimed at higher level objectives, such as promoting economic growth, could have positive side effects on household saving. More specific policy options to boost household saving include measures to promote private occupational and personal plans, including some changes in taxation, and developing incentives to work past age 65.

Subject: Aging, Expenditure, Income, Labor, National accounts, Pension spending, Pensions, Personal income, Population and demographics

Keywords: Aging, Asset allocation, CR, Employee, Employee age, Europe, Household saving, Income, ISCR, Pension schemes, Pension spending, Pensions, Personal income, Portugal, Rate, Saving rate, Saving-investment balance, Tax treatment

Publication Details

Pages:

45
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2019/222
Stock No:

1PRTEA2019002
ISBN:

9781498325196
ISSN:

1934-7685

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