The Portuguese Economy: The Last Few Decades (revised edition)

No. 118 JANUARY 2022

Portugal’s economy has not grown in 15 years. Despite the expansion from 1950 to 1973 and in the second half of the 1980s, as well as reasonable developments after the troika intervention and before Covid-19, the GDP per capita has been stagnant since 2005. Given this mediocre performance, the Portuguese economy has diverged from the European average and the country’s social indicators have improved very slowly. This essay updates a crucial analysis that began in 2010. At the root and in the complexity of the problem of the Portuguese economy, it identifies the poor productivity resulting from the protection of the non-tradable sector, which is also related to the grand political projects after the revolution: the welfare state, the European Union and the euro. And it raises an alert: the return to dependence on the lifeline of European transfers to maintain a minimum rate of economic growth is no guarantee of sustained development.