Portugal's economic and political situation.
The European Commission’s recommendation on May 22 to close the excessive deficit procedure opened against Portugal in 2009 constitutes a victory for the minority Socialist government of Antonio Costa. The Costa administration entered office under inauspicious circumstances in November 2015. It has since managed to corral a stable parliamentary majority with its left-wing allies while achieving budgetary consolidation and governing over an economic upturn.
- Budgetary consolidation and positive macroeconomic indicators are underpinning a fall in the interest rate on Portuguese bonds.
- The good economic situation increases pressure on the government to revert to austerity at a faster pace next year.
- The main challenge for the government will be to ensure that budgetary consolidation continues.