MARKET STATUS
PRODUCTIVITY, DEBT AND UNCERTAINTY: THE TRIANGLE OF THE
CURRENT SITUATION
Portugal has stood out positively, with one of the largest declines in its public debt ratio since 2019, ending 2024 at around 95% of GDP. This result was mainly due to economic growth and fiscal prudence, with positive primary balances. However, the future context will be more challenging: the economic slowdown and the increase in interest and public spending (particularly defense, healthcare, and social support) will make further debt reductions difficult.
According to the BdP, the positive budget balance (0.7% of GDP in 2024) could give way to a slight deficit in 2025. Employment is growing more sharply than last year, with a budget surplus of 0.5% of GDP in the first five months of 2025, in contrast to the 2.1% deficit in the same period in 2024. This improvement results from an increase in public revenue, driven mainly by Social Security contributions, as well as by higher income tax (IRS) and VAT revenue. To sustain current performance, improving productivity (growth of 0.4% per year between 2014 and 2024) will be crucial. The much-touted public administration reform should also translate into much-needed efficiency and a consequent contribution to increased productivity.
Economic uncertainty is on the rise, with clear signs in the US: consumers and businesses are showing growing concern about tariffs, conflicts, and political instability. The US approved a fiscal plan that is expected to keep the public deficit at around 7% of GDP for the coming years. Public debt could reach 130% of GDP by 2030, while growth prospects deteriorate. Since November 2024, growth forecasts for 2025 have been revised downward by more than 0.5 percentage points. This scenario raises concerns about the sustainability of US public finances. Experience shows that markets react quickly and with little differentiation in stressful situations.
The European Commission presented a plan to strengthen the competitiveness of the single market, focusing on the Union's economic and geostrategic challenges. The success of this initiative will require a firm and coordinated commitment from Member States, beyond ad hoc responses to crises. Revitalizing European investment and addressing the skilled labor shortage are urgent priorities, following the example of countries like China, which have strategically invested in improving purchasing power and training their populations.
Brief notes on housing:
Social housing represents 1.1% of the housing stock (the EU average is 8%) and is mostly developed by municipal entities.
Secondary homes account for 19% of the total housing stock.
Local accommodation accounts for 7% of all secondary homes.
The number of building permits and licensed housing units is about half of what it was before the 2008 financial crisis.
The BdP reported that loans taken out in the last 12 months have an average outstanding amount of €141,000 and a monthly payment of €609.
Happy holidays.
Sources: INE, BdP, BPI Research, Eurostat, Yahoo Finance; ECB, Turismo de Portugal
DEVELOPED ACTIVITIES
i. Current Management
ii. Achievements
Conclusion of the project: VFX 47
VFX
47
Capital 243.400€ | 26 Members
We're implementing some changes to the metrics we present. To calculate a project's elapsed time, we calculate the fraction of a year represented by the number of days between two dates (the start date and the end date) x 12. We present the project's results as ROI (return on investment).
iii. Improvements and Evolutions
EVERYONE
COUNTS
FROM CONFLICT TO COOPERATION: UNDERSTANDING THE NEGOTIATION PROCESS
“Negotiation is a joint decision-making situation in which two or more people decide how to allocate limited resources among themselves.” (Neale & Bazerman, 1990; Thomson, 1998).
Negotiation is part of our daily lives. We may not always be aware of it, but we are constantly negotiating. It is a process that cuts across all areas of life — personal, family, or professional. A decision-making moment is a negotiation, often imperceptible in something as simple as buying a piece of clothing or a meal, and more noticeable in more complex decisions like choosing a holiday destination, or purchasing a car or a home.
Negotiation involves making proposals, constant evaluation of those proposals by both sides, assumptions from both parties, counterproposals, demands, and concessions. It is not always possible to bring negotiations to a successful conclusion. In a negotiation, there are always two or more parties trying to reach an agreement. One of the first aspects we notice in a negotiation process is flexibility. Depending on the level of flexibility of the negotiators, we can anticipate whether conflicts are likely to arise. The less flexible the parties are, the more likely conflict will occur. Conflict is necessary in negotiation, but an inflexible attitude may prevent it from reaching a resolution.
Sometimes, the problems stem from the parties themselves. Negotiations between family members or people with close relationships are often constrained — either because of worn-out relationships or a desire not to upset the other party. Negotiation can also be time-consuming. Complex negotiations require more analysis, which prolongs the decision-making process. At times, indecision from one party can drag the process out even further. Concluding a negotiation requires a willingness from both sides to give in order to receive. It can be a difficult and demanding process, but if the negotiators possess certain qualities, the negotiation can become simple and transparent.
The negotiation process is fundamentally based on two types: the so-called integrative negotiation and distributive negotiation (Walton & McKersie, 1965).
Distributive negotiation assumes a conflict of interests, in which the resources are fixed and each party seeks to obtain as much as possible. Thus, the more one gains, the less the other gets — both parties compete for the biggest piece of the "pie".
Integrative negotiation, on the other hand, aims to complement needs or interests by recognizing that those interests are not necessarily opposed. In this type of negotiation, the resources are not fixed — each party works to generate more resources, essentially working together to increase the size of the pie. Typically, there is more openness between negotiators: transparency about concerns, mutual sensitivity, trust, and flexibility. Everyone wins.
In principle, integrative negotiation is preferable to distributive negotiation. It is more “friendly,” more likely to bring negotiators closer together, and leads to a shared feeling of victory. Both parties win. Sometimes, integrative negotiation contains moments of distributive negotiation — human beings naturally seek their own advantage, and we are not always willing to give up our goals. But at times, it is necessary to concede on some aspects in order to reach a successful conclusion.
Throughout the negotiation process, not everything is linear or smooth. It may happen that one party dominates or imposes its will on the other. In such cases, the involvement of a third party to serve as an arbitrator is not unusual — courts are an example of this. There may also be threats or the imposition of conditions by one party. Or one side may yield in order to avoid confrontation.
Integrative negotiation aims to reconcile the interests of all parties so that everyone can come out ahead. The goal is to reach an agreement that satisfies all parties involved. However, an integrative negotiation is not always possible — for example, when interests are truly antagonistic. In such cases, the best solution may be to fairly distribute gains and losses.
Information sharing, joint decision-making, creativity, empathy, and good interpersonal relationships are essential skills for a good negotiator. In simple terms: cooperation. Conflict is necessary for growth, and although it may seem like it will force one side to yield or lose, the simplest way to overcome this situation is by increasing the resources available, in other words, making the pie bigger.
Nuno Santos, Asset Manager
MONTH'S
SCHEDULE
August 2025
