Not all the news in Portugal is bad. Austerity has led to more than 2% of the population emigrating over the past two years. Economic growth remains elusive. The country’s main trading partners in the EU are barely faring any better.
Local economists insist, though, that the international mobility that has been more or less synonymous with Portuguese society since Vasco de Gama set sail for India in the 15th century will lead Portugal – and its leading banks – to a brighter future.
It is this mobility that has helped to underpin the single most striking feature of the Portuguese recovery story: the surge in its exports and the accompanying decline in its current account deficit. Having peaked at 12.6% of GDP in 2008, according to Banco de Portugal data, this deficit fell to 6.4% in 2011 and to just 1.8% in the first three quarters of 2012.
Pivotal to the successful Portuguese exports story, however, has been the speed with which the country’s corporate sector has looked beyond Spain and the EU to new markets – most notably to Portuguese-speaking countries in Latin America and Africa.
José Brandão de Brito, chief economist at Millennium BCP in Lisbon, says that rising exports have been underpinned chiefly by a reduction in unit labour costs, driven by a combination of increased productivity and declining wages.