Free from creditors' control, Portugal still struggles with austerity

GMT 20:20 2015 Sunday ,17 May

Arab Today, arab today Free from creditors' control, Portugal still struggles with austerity

People look at a shopfront advertising its liquidation in central Lisbon
Lisbon - AFP

One year after gaining freedom from the control of its international creditors, Portugal has succeeded in dramatically improving its economy, though most people are still struggling under the stringent austerity measures.

In 2011, Portugal received a 78 billion euro (89 billion dollar) loan to save its failing economy, joining one of the EU's other struggling economies, Ireland, in being bailed out.

Now, the deficit is under control, tourists are coming in record numbers, the real estate market is recovering and exports and investments are increasing.

But in return for the bailout, the government had to cut wages, pensions and social benefits, and its population continues to grapple with high unemployment rates and increased taxation.

In a sense, Portugal made the painful decisions that people in Greece, another eurozone country that is now deep in an economic crisis, bridled at.

Economic forecasts in Portugal are looking promising this year, with the government expecting 1.6 percent growth, but experts say that this apparent success does not mean much for the people -- yet.

"The numbers are better, but the life of the Portuguese hasn't changed. One year after the era of the troika, the economic miracle appears to be a mirage," Domingos Amaral, a professor of economics at the Catholic University in Lisbon, told AFP.
The officials of the troika, the financial trio consisting of the European Union, International Monetary Fund and the European Central Bank, celebrated Portugal's renewed financial sovereignty in 2014, while stressing it did not mean an end to sacrifices.

"Unemployment is still high, along with taxes and public debt. The growth is small, and Portuguese people continue to emigrate," said Amaral.

Nearly one out every five Portuguese live below the poverty line, with an income below 411 euros per month.

Unemployment has decreased, but is still high at 13.7 percent of the working population and 34.4 percent among young people.

- Jobless and without hope -

"Nothing has changed for me since the departure of the troika. I lost my job at the beginning of the crisis in 2009 and I have little hope of getting it back," said Carlos Navarro, 48, a former jeweller who came to seek work at an unemployment centre in Lisbon.

Divorced and a father of two girls, Navarro is no longer entitled to unemployment benefits.
He lives from odd jobs, and receives the minimum social security payment -- and even that has been cut.

"I receive 348 euros, or 40 euros less than before," he said.

Unpopular at home, the Portuguese government has been able to win the confidence of foreign investors, who were quick to snap up the country's debt securities.

But with legislative elections five months away, the centre-right government is convinced that with austerity, it has taken the right route.

"More than ever, I am convinced that the path we have taken is the one we must follow," said Prime Minister Pedro Passos Coelho on Saturday.  

But worry persists around the banking sector, which was shaken after the collapse of the Espirito Santo group, whose debt escaped the vigilant watch of the troika.

"The recovery is still very fragile and due in part to external factors, such as the drop in oil prices and the (value of the) euro," said Joao Cesar das Neves, a professor of economics at the Catholic University. Das Neves says that the Espirito Santo collapse in particular shows a lack of stability in the Portuguese economy.


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