The Portuguese economy, bailed out by the European Union eight years ago, is booming, writes Reuters, adding that Portugal “is enjoying its highest economic growth in nearly two decades, fuelled by record tourism, an upswing in the housing market, a growing tech sector and strong exports. Private investment has returned to 2009 levels, helped by foreign investors including Chinese companies.”
This very lack of state investment, despite well publicised claims to the contrary, has allowed the government to hit internationally agreed targets but leaves the country vulnerable to a future downturn or recession.
Portugal’s total debt is around 120% of gross domestic product, so Carlos Costa’s executive has not dared to push ahead with home-funded investment, often relying on EU funds to support various projects.
The 2018 public investment budget was €4.53 billion but this was cut to make the national accounts look better, with only €4.14 billion spent.
The Socialists have been spending, but concentrating on vote winning initiatives such as a reduction in income tax and raising state sector pensions.
It does not help international credibility that everyone seems to have been on strike, with public sector workers, prison guards, teachers and nurses all demanding a bigger slice of the cake as Portugal 'seems to be doing so well.'
PM, António Costa, has announced new hospitals, Montijo Airport, subway system extensions in Lisbon and Porto but much of the railways system needs investment and Portimão is crying out for an improved cruise ship docking area.
This underinvestment can be set against a backdrop of slowing economic growth across Europe and the smooth functioning of international trade is under threat.
A weakened Portugal will suffer, with investment shrinking further from already low levels.