Portugal faces emerging structural challenges

Subject

Outlook for Portugal.

Significance

Following four years of stable economic growth and budget deficit reduction, the Socialists will likely be re-elected as the largest party but again face the prospect of ruling without a majority.

Impacts

• Spanish political and economic uncertainty will increase the attractiveness of Portuguese debt.
• The right-wing Social Democratic Party's inability to recover support could lead to radicalisation within the party.
• The government will push ahead with plans to build a second airport in Lisbon despite environmental groups' opposition.