Improved capital markets can support Portugal’s COVID-19 recovery


Despite the strong economic performance and sustained reform momentum over the past few years, Portugal entered the COVID-19 crisis with undersized capital markets. These markets must now be mobilised to support a resilient, dynamic and sustainable recovery, according to a new OECD report.

The OECD Capital Market Review of Portugal offers Portuguese authorities policy recommendations that can help to strengthen capital markets to finance corporations of all sizes and provide investment opportunities to savers.

The improved economic conditions in the country over the recent years have not translated into a rise in the use of capital market financing by Portuguese companies. At the end of 2019, there were only 47 companies listed on the Portuguese stock market, only a third of the number listed back in 1997. Instead, companies heavily rely on bank financing, with very few using long-term bond markets. The picture for private capital markets is similar. In 2019, the Portuguese share of European private equity investments was less than half of its share in the GDP of the European Union.

“Years of low activity have severely weakened Portugal’s capital market ecosystem,” said OECD Secretary-General Angel Gurría, presenting the report with Portugal’s Finance Minister João Leão and EU Commissioner Elisa Ferreira. “Minor adjustments are not sufficient. And together with the authorities concerned, the Portuguese government is well prepared to undertake a broad range of policy initiatives to boost domestic capital markets. This will help Portugal to build a more diverse, innovative and resilient business sector that can thrive in the post-COVID world.”

An important impediment to the development of Portuguese capital markets is the low savings ratio of households and a limited allocation of savings to capital market securities. Since 2000, the aggregate net savings of Portuguese households have been among the lowest in the European Union. Importantly, households allocated almost half of their savings to bank deposits, compared to around one third in France and Italy. Providing households with attractive investment opportunities, directly or through collective investment vehicles, will give them more choice when managing their savings and better opportunities to share the wealth creation of the Portuguese business sector.

The report notes that the dominance of small firms with low productivity holds back Portugal’s ability to move further towards high value-added knowledge-based production and competitiveness. More active capital markets could play an important role in helping corporations to grow, increasing the pool of investible companies and facilitating the process of consolidation.

The OECD Capital Market Review of Portugal, with main findings and recommendations, is accessible at

The project was funded by the European Union via the Structural Reform Support Programme and implemented by the OECD, in co-operation with the European Commission’s Directorate General for Structural Reform Support (DG REFORM).


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