Crisis and Punishment and the Day After

OCTOBER 2019

We have been told that we citizens have put too much trust in the future and don't live within our means, with the result that we have sunk the national economy. But what was the role of the state and the international setting in this shipwreck? What are the root causes of the crisis that resulted in the 2011 bailout, the third since the April revolution, after years of indebtedness? In this must-read essay, three of our best macroeconomists analyse the developments in the Portuguese economy in the last three decades. Step by step, they explain the hows and whys of the crisis, the suffering we went through and the recovery that followed. Among other conclusions, there is the one that each of us individually could have done little or nothing to counter the course that led to the crisis because the crucial decisions were made by the people who dominated the networks of interests and took the state hostage. Progress was made during the adjustment and recovery. But the weak growth of the last five years suggests that Portugal is still caught in a low-growth trap.