The Jornal de Negocios online published this full-page headline: “The Bank of Portugal expects in 2017 the highest growth of the century.” Strong words for a newspaper which is not exactly pro-left and / or close to leftist governments.
The growth in gross domestic product for 2017 is forecasted at 2.5 percent, higher than the 2 percent anticipated just a few months ago. A positive cycle that promises to hold for 2018 and 2019, where the GDP trend marks a +2 percent and +1.8 percent, respectively.
These projections are much higher than the forecast for the EU. This is one of the arguments in the current debate that, finally, after 17 years, Lisbon returns to converge with Europe.
The GDP growth is not the only fundamental index that shows a positive trend. Soon, Portugal should overcome the procedure for excessive deficit; after eight years of slippage, the deficit has finally fallen below 2 percent, which will allow higher spending margins in the future.
Is the expansionary austerity paying off? No, perhaps the source of such a strong performance shouldn’t be looked for at the level of domestic consumption, since this indicator has grown only 2 percent. Actually, perhaps this is the weak number because, due to strong household debt, the number isn’t very high. No, the basis of growth is a substantial 10 percent increase in exports. Again, the predictions were much lower (+6 percent).
Of course there is a downside: exports are growing in all sectors, but especially in tourism and this, linked to the investment in the real estate market, is causing an explosion in house prices that is already shaking the precarious balance.
All this to say that not everything is sunshine and rainbows. Although inequality has been reduced, it’s still very high. Wages and salaries are very low, this is quite true, but it is also true that in the last couple of years, the government, despite the immense budgetary constraints and with undeniable moderation, is working on all the imbalances, including the fragile territorial management.
It should be pointed out – this is an opinion widespread not only among those who support Prime Minister António Costa – that these numbers continue to surprise. We are faced with a case that may be potentially revolutionary.
To better understand it, it is necessary to take a step back and go back to the times when the possibility of a frentista alliance was in its infancy. The prophets of doom had predicted then that such a composite coalition would have countless and inevitable dire consequences: political instability, government spending out of control and, for the most pessimistic, more than likely it would have ended in another intervention of the Troika. The preferred model was, and is, in the absence of monochrome majorities, the “grand coalition” between the two centrist parties, considered by experts as the most desirable. So the legitimacy of this unusual alliance goes by its ability to promote a positive economic dynamic, to be assessed, unfortunately, from the point of view of the classic indicators: GDP and deficits.
Thanks to the achievement of these objectives, now other countries would like to follow the experience of Lisbon.
Last Sunday, while the Pedrógão tragedy unfolded and resulted in the death of 64 people, in Spain, Pedro Sánchez declared in his rally to resettle in the PSOE secretary, that the model to follow was that of the Iberian neighbor, therefore implying the need for an alliance with Podemos. An important news for a Europe in search of new recipes that can offer an exit from the austerity impasse.
This battle involves the entire continent and will be fought with no holds barred. On June 21st, the Spanish newspaper El Mundo seems to want to answer Sánchez in an indirect yet pervasive way: “The disastrous management of the tragedy could put an end to the career of Prime Minister António Costa.”
Currently, no Portuguese media questions the Costa Government for the management of the fire, although the controversy is growing. This may be a tactic to exclude a possible Podemos PSOE alliance and the export of the Portuguese model.
Subscribe To Our Newsletter
Your weekly briefing of progressive news.