In 2020, gross disposable income of the Portuguese economy declined 4.3%, in nominal terms. General government borne 85% of this loss (3.7 pp), with a 1.8 pp contribution of discretionary measures to support households and corporations´s income.

The fiscal support measures limited the impact of the shock on households and corporations. These were mostly aimed at corporations and have only partially offset the losses borne by this institutional sector. Still, corporations’ gross disposable income declined by 11.4%, explaining 1.3 pp of the fall recorded for the economy as a whole. The impact of discretionary measures amounted to 1.6 pp, notably the “simplified layoff”, the extraordinary incentive to support the normalisation of economic activity, and the suspension of corporate income tax prepayments. On the contrary, households’ gross disposable income increased by 1.0%, explaining 0.7 pp of the change in gross disposable income for the economy as a whole. For that contributed the direct impact of fiscal support measures to households and the indirect impact of support trough corporations to preserve employment and wages. Direct support measures, which only include transfers made directly from the State to households following legislative changes, reached 0.4% of national income.

For more details see Box 5 “Loss of national income: breakdown by institutional sector“, published in the Economic Bulletin of Banco de Portugal, May 2021.

Prepared by Ana Correia, Lara Wemans and Cristina Manteu. The analyses, opinions and findings expressed above represent the views of the authors and not necessarily those of Banco de Portugal or the Eurosystem.

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