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00:00POURING INTO THE AREA. WE ARE JOINED NOW BY THE ECONOMY MINISTER, MANUEL CABRAL. WHAT CAN THE DIGITAL ECONOMY DUE FOR PORTUGAL? WHAT CAN THE DIGITAL ECONOMY DUE FOR YOUTHFUL EMPLOYMENT? WHAT CAN IT DO FOR THOSE PEOPLE WHO WILL BE LEFT BEHIND AS A RESULT OF THE ECONOMIC EXPANSION IN THE LISBON AREA? WHAT CAN IT DO TO HELP? MANUEL: THE DIGITAL ECONOMY IS ALREADY MAKING BIG CHANGES IN THE ECONOMY. THERE ARE EXPORTATION OF SERVICES OF SOFTWARE. IT ATTRACTS A LOT OF INVESTMENT IN TECHNOLOGICAL FIRMS THAT ARE ARE THERE STARTUPS OR THE BIG FIRMS, LIKE CGI FROM CANADA OR FIRMS LIKE MERCEDES, INSTALLING THEIR I.T. TCENTER HERE IN LISBON. THEY ARE BRINGING A LOT OF BUSINESS, BUT ALSO GRADING JOBS. PORTUGAL HAS THE MOST QUALIFIED GENERATION. TODAY OUR YOUNG PEOPLE ARE MORE QUALIFIED THAN EVEN THE SAME GENERATION OF GERMANY OR THE U.K. BUT THIS IS A NEW THING. THIS NEW GENERATION IS NOT JUST GETTING THESE JOBS FROM THE SIEMENS. THEY ARE ALSO CREATING AND BOOSTING, IN TERMS OF STARTUPS, THAT ARE FACING THE WORLD GLOBALLY AND FACING THE MARKETS. THEY ARE GOING TO PUT THEIR PROJECTS THROUGH FOR INVESTORS THAT COME FROM ALL OVER THE WORLD. GUY: ARE PEOPLE COMING TO THE AREA FROM CATALONIA? ARE THEY COMING FROM THE U.K.? ARE YOU GETTING INTEREST FROM THESE TWO AREAS RIGHT NOW AND ARE YOU GOING TO BENEFIT? MANUEL: LAST WEEK WE HAD THREE FIRMS FROM CATALONIA THAT APPROACHED THE MINISTRY TO CHANGE PART OF THEIR ACTIVITIES FROM BARCELONA TO LISBON. THAT IS TRUE. I DON ' T KNOW IF THIS IS A BIG WAVE. FROM THE U.K. WE HAD SEVERAL STARTUPS. THEY DECIDED TO MOVE PART OF THEIR ACTIVITY TO LISBON. AS WELL AS BIG FIRMS, LIKE FIRMS WE ARE INSTALLING THAT HAVE CREATED ALREADY 350 JOBS IN I.T. WE HAVE HAD A MOVE FROM THE U.K POTO PORTUGAL IN SERVICES. I DON ' T THINK THEY ARE GOING TO CHANGE HEADQUARTERS FROM LONDON TO LISBON, BUT AT LEAST THEY ARE CHANGING PART OF THEIR ACTIVITY BECAUSE WE ARE IN THE SAME TIME ZONE AND ARE STILL IN THE EUROPEAN UNION. THESE FIRMS SEE IN PORTUGAL, NOT JUST AN OPPORTUNITY TO REMAIN WITHIN THE EUROPEAN MARKETS, BUT THEY ALSO SEE THAT THIS YOUNG GENERATION IS HERE, AND THE COST OF DOING THE SAME ACTIVITIES IN PORTUGAL THAT THEY WERE DOING IN LONDON ARE MUCHER LOWER. SO, THEY CAN DO IT IN A MUCH MORE COMPETITIVE WAY. THEY ARE MOVING SOME ACTIVITY TO PORTUGAL FROM I.T. FIRMS. THIS IS GOOD NEWS. GUY: YOU SEE A LOT OF MONEY GOING INTO THE PORTUGUESE PROPERTY MARKET AND THE LISBON PROPERTY MARKET. DO YOU THINK SOME OF THOSE NUMBERS ARE GOING TO CHANGE? ARE YOU WORRIED YOU ARE GETTING A BOOM IN THE PARTY ' S HOUSING MARKET RIGHT NOW? -- BOOM IN THE PORTUGUESE HOUSING MARKET RIGHT NOW? MAUEL: WE ARE GETTING INVESTMENT IN THE REAL ESTATE AREA. WHEN THE PRICES CAME DOWN DURING THE CRISIS -- I THINK THE GROWTH IN THE AREA IS STILL MUCH LOWER THAN OTHER CAPITAL. WHAT WE SEE MOVING THROUGH TO PORTUGAL IS NOT JUST REAL ESTATE. INVESTMENT GREW 10% IN THE FIRST SEMESTER OF THIS YEAR. INDFOREIGN INDIRECT INVESTMENT IS GROWING AS WELL, AND NOT JUST ON REAL ESTATE. IT ' S GROWING MUCH MORE IN I.T. SERVICES AND INDUSTRY. PORTUGUESE GROWTH IS GROWING AT 3%. SO, THIS GROWTH IS SUSTAINABLE GROWTH. WE SEE GROWTH BASED ON INCREASED PRODUCTION AND EMPLOYMENT. PORTUGAL IS THE SECOND COUNTRY IN EUROPE WITH THE HIGHEST EMPLOYMENT. THE INVESTMENT IN REAL ESTATE IS WELCOME. THE CRISIS TOOK THE PRICES DOWN. THE BOOM THAT THE ECONOMY IS HAVING NOW IS PUTTING THE PRICES UP, AS IT SHOULD, BUT THEY ARE STILL AT A MUCH LOWER LEVEL THAN ANY OTHER EUROPEAN CAPITAL. THE PRICES OF REAL ESTATE IN LISBON ARE STILL VERY COMPETITIVE, COMPARED WITH OTHER CITIES AROUND THE COUNTRY. GUY: I WANT TO GET A SENSE OF THE BIGGER PICTURE RIGHT NOW. I THINK YOU HAVE GOT 2.6% GROWTH PENCIL INED IN THIS YEAR. YOU TALK ABOUT THESE NUMBERS BEING PRUDENT. I THINK IT FLOWS TO 2.2% NEXT YEAR. WHAT IS THE UPSIDE? COULD THE ECONOMY GROW FASTER THIS YEAR AND NEXT? MANUEL: THE ECONOMY IS NOW GROWING AT 3%. THIS IS PRUDENT FOR THIS YEAR AND NEXT YEAR. WE HAVE A POSITION OF 1.8% GROWTH. WE THOUGHT IT WAS A PRUDENT PROVISION. NOW EVERY INTERNATIONAL INSTITUTION IS PROTECTING MUCH FASTER GROWTH THAN THAT. FOR NEXT YEAR WE HAVE A PREDICTION OF GROWTH THAT IS BIGGER THAN THE ONE IN THE BUDGET OF LAST YEAR. LATEST DELAY REALISTIC AND PRUDENT PROVISION. WE ' RE WORKING ON FINANCING, WORKING ON INVESTMENT, WORKING WITH THE PORTUGUESE FIRMS TO BOOST GROWTH AND TO MAKE SURE WE ARE ABOVE THE PREDICTIONS. WHAT WE DO NOT WANT IS TO PUT PREDICTIONS THAT ARE TOO HIGH, AND THEN FAIL TO MEET THEM. WE HAVE THE LOWEST DEFICIT IN 40 YEARS. THIS YEAR THE DEFICIT IS GOING TO BE LOWER STILL. NEXT YEAR WE ARE GOING TO HAVE ONE OF THE BIGGEST PRIMARY BALANCES, POSITIVE PRIMARY BALANCES ALL OVER EUROPE. SO, WE ARE COMMITTED TO FISCAL REVITALIZATION. THROUGH EXPORTS, WE ARE HAVING A GOOD EXPORT MOMENT. YOU CANNOT PREDICT THAT WE ARE GOING TO CONTINUE TO GAIN MARKET SHARES, AS WE HAVE DONE IN THE LAST 201O0 YEARS, THAT WE HAVE TO WORK TO ACHIEVE THAT. GUY: WILL THE FIRES THAT HAVE ROCKED YOUR GOVERNMENT HAS AN IMPACT ON THOSE NUMBERS? MANUEL: I THINK THE WEB SUMMIT IS GOING TO BE A GREAT EVENT. IT WILL HAVE AN IMPACT IN BRINGING INVESTORS TO PORTUGAL. LAST YEAR, SOME OF THE INVESTORS THAT CAME, SOME OF THEM MET PORTUGAL FOR THE FIRST TIME AND I THINK THIS YEAR, THEY WILL REALIZE THEIR VISION IN PORTUAL. GUAL. I THINK SOME OF THEM WILL INVEST MUCH MORE THANK YOU VERY MUCH. GUY: MINISTER, THAT WAS NOT THE QUESTION I ASKED. WITH THE GREATEST RESPECT IN THE WORLD, LET ME ASK IT AGAIN. DO YOU THINK THE FIRES THAT HAVE HAD SUCH A GREAT IMPACT ON YOUR COUNTRY WILL IMPACT THE ECONOMIC NUMBERS? MANUEL: SORRY, IT WAS ABOUT THE -- I DON ' T THINK THE SOCIAL IMPACT WAS QUITE BIG. THE IMPACT WITHIN THE ECONOMY WAS IMPORTANT, BUT IT WILL NOT IMPACT THE ECONOMIC GROWTH, IF THAT IS THE QUESTION, BECAUSE A LOT OF THE FIRMS THAT WERE BURNED WERE INSURED AND THE IMPACT WAS 0.01% OF GDP IN TERMS OF THE DAMAGES. LONGTERM, IT IMPACTED THE FORESTS, WHICH WAS BAD. BUT WE ARE WORKING TO IMPROVE THAT. IT WAS A SMALL PART OF THE ECONOMY THAT WAS IMPACTED. TO PUT THESE FIRMS BACK TO WORK, INVESTMENTS ARE COMING BACK TO THEM. SINCE A LOT OF THE BIG FIRMS WERE IMPACTED, WE JUST LOST A FEW FIRMS. THIS IS NOT GOING TO HAVE A PERMANENT IMPACT ON THE GDP. I THINK THE NUMBERS OF ECONOMIC GROWTH ARE SHOWNING THE GDP IS GOING TO WORK AND STILL

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Portugal's Caldeira Cabral on Property Market, Economy

Portugal Economy Minister Manuel Caldeira Cabral discusses the impact of the digital economy on Portugal's economy, tech firms, the Portuguese property market, and his outlook for the economy. He speaks on "Bloomberg Markets: European Open." (Source: Bloomberg)

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