Portugal Trade Deficit Widens
Statistics Portugal have just published the country’s Global Trade Balances data for February. The overall figure for goods and services shows a trade deficit increase to €333.3 million for the month of February, this is further slippage on the January deficit.
Portugal has made significant progress on it’s trade balance deficit since hitting a record low in 2010. This country however has not historically been a net exporter, Portugal has never shown a balance of trade surplus since records began.
Portugal is among the club of European countries that required an EU/IMF bailout to see it through this global economic crises. It is however in the process of exiting this bailout which will end in just under two months time. Similar to it’s fellow bailout club members, Portugal’s exit will be conducted without the safety net of a precautionary credit line. European politics rather than fundamental economics are responsible for Portugal having to go it alone when the three year program finally comes to an end.
Markets are questioning whether the Portuguese economy has sufficiently stabilized in order to make the transition back to open market funding. The country has come a long way under the guidance of the bailout troika but still it faces significant economic challenges. Unemployment at 15.3% is down from a peak of over 17.5%, this is still one of the highest rates in the Eurozone. The high unemployment rate has been creating downward pressure on wages, this is proving of benefit to the Portuguese economy which although still mired in recession is poised to emerge from this crises as one of the most competitive in Europe.
Portugal still has a long road ahead however GDP growth is finally back in positive territory, recovering over the last three quarters from a low of minus four percent to its current level of plus 1.7%.
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