Small, high growth dynamic and highly indebted


In the course of the global financial and debt crisis, Portugal and Greece entered a deep economic crisis together. In the meantime, the tide has turned. With growth rates of 0.5% and 0.8% respectively, Portugal and Greece are among the growth drivers in the euro zone. At this point, however, the similarities have already largely ceased. The starting position that led to this result is quite different for both countries.

The fact that Portugal made the leap out of the red much earlier is mainly due to the fact that the country began implementing extensive structural programmes at an early stage and in many cases even exceeded the requirements of the „Troika“. In Greece, on the other hand, the precarious budgetary situation left the incumbent governments with little choice but to comply with the Troika’s demands and pursue tough reform measures. Often, however, the conditions were implemented incompletely or delayed. To date, the structural adjustment process in Greece has not been fully completed.

One of the biggest problems facing both countries is their still relatively high level of debt. Not only in 2018 did Greece take last place in the euro zone as a whole with 181.1% of gross domestic product; Portugal is in third last place. This circumstance leaves little room for fiscal stimuli. As the global economy cools, however, the call for higher government investment is likely to grow louder soon.

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