ANNUAL REPORT ‘12
ECONOMIC AND REGULATORY ENVIRONMENT
29
its rating on the sovereign debt of the Spanish govern-
ment to BBB- (medium-low).
The financial markets are haunted by doubts regarding
the viability of the euro and the ability of European
countries (especially the peripheral countries) to take
fiscal and structural measures to combat public deficit.
In 2012, Portugal implemented the policies agreed
upon in the Financial and Economic Assistance
Programme signed in 2011 between the European
Commission (EC), the European Central Bank (ECB),
and IMF. The limits imposed on the budget deficit were
revised during the fifth Troika bailout assessment to 5%
of the GDP in 2012, as opposed to the 4.5% originally
established. This change meant that compliance with
the 3% limit for the budget deficit was postponed for
a year.
Despite this extension, in the last few months of 2012,
the interest rates on the Portuguese public debt regis-
tered the largest drops since December 2010, perhaps
an encouraging sign of the renewed confidence of
some investors.
However, the negative effect of the austerity measures
adopted has been greater than expected and the
recession in Portugal in 2012 will be over 3%, due
to the contraction of internal demand and the lack of
investment. Unemployment levels in the country have
been troubling, as high as 16.3% in November 2012,
while inflation and salaries have gone down. The factors
include the restraint in spending by the public sector,
pay cuts, and higher income taxes.
These factors, together with reduced credit, have
contributed to a decrease in the disposable income of
families and the lower level of confidence of the various
economic agents, which hit a new low in December
2012.
6.1.2_The air transport sector
The performance of air transport is strongly influenced
by external factors, such as the performance of the
global economy, which has led to alterations in the
structure of this sector.
Added to the pressure of high fuel costs on their
operations, airlines have been facing growing com-
petition from the increased market share of the
low-cost companies, whose business model allows
them to offer lower fares and sufficient quality to
2007
2008
2009
2010
2011
Sep. 2012
june 29, 2012
Italy
Spain
France
Germany
GOVERNMENT BOND YIELDS (%)
8
7
6
5
4
3
2
1
0
8
7
6
5
4
3
2
1
0
