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Ed Webb

Portugal's Sardine Capitalism Is a Post-Pandemic Economic Model - 0 views

foreignpolicy.com/...alism-is-a-model-for-the-world

EU Italy Portugal Spain Greece Ireland Eire economy migration Euro

shared by Ed Webb on 18 Oct 21 - Cached
  • Portugal’s colonies are long gone, but the country’s penchant for charting its own course lives on in its uncanny ability to maintain what is arguably the European Union’s most successful mixed economy. Despite the global financial crisis a decade ago and the more recent economic downturn driven by the pandemic, Portugal has emerged as a growth model for Europe’s smaller economies, which have struggled to balance cultural traditions and political values against the demands of much larger economies—such as Germany, France, and Italy—with which they share the euro.
  • Portugal has found a formula for maintaining Western Europe’s most reasonable cost of living, relatively low unemployment, steady economic growth, and general public contentment in an age of polarization
  • The 2008-2009 financial crisis exposed the weaknesses and contradictions of the eurozone project. Lumping economies like France and Germany into a single currency with the likes of Latvia, Cyprus, and Greece led to trouble. Unable to devalue a national currency—the classic economic answer to a sovereign debt crisis—weaker eurozone economies nearly lost access to international markets. The solution imposed by the continent’s apex economies, led by the Germans, was an austerity so deep it crippled smaller economies for more than a decade.
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  • a country of 10 million citizens whose primary influence on global affairs these days is the fact that its language is still spoken by about 240 million people in the far-flung lands it once ruled, including Brazil, Angola, Mozambique, and East Timor. With the world’s 34th largest economy—known mostly for sardines, soccer, and Port wine until recently—Portugal has managed to defy stereotypes about southern European nations (supposedly lazy and imprudent) and countries run by socialists (inefficient and uncompetitive) to combine growth, social cohesion, and quality of life
  • Socialist governments gave way to social democrats in 2015, then back to socialists in 2021. Along the way, Portugal resisted troika pressure to accept a second tranche of bailout funds and shook free from foreign-imposed austerity
  • Italy, with the highest debt-to-GDP rate among the world’s large economies (158 percent), has never recovered from the disastrous collapse it suffered after 2008. That year, Italy was a $2.39 trillion economy. At the end of 2020, it was a $1.9 trillion economy, a loss of 20 percent of its economic heft, since 2010. Spain, though not as indebted, has an unemployment rate in the high teens since the crisis began and remains at 15.3 percent today.
  • Spurred in part by unusually generous tax and immigration policies aimed at luring wealthy northern Europeans and North Americans to resettle, the country’s expat population has exploded from about 100,000 people at the turn of the century to nearly a half million people in 2020, when the rate of increase slowed for the first time since the financial crisis due to COVID-19, according to a report by Portugal’s Foreigners and Border Service. Even so, the overall number grew by 12.2 percent in 2020, and that has increased as restrictions were loosened this year.
  • One reason beyond beautiful beaches, low prices, and great seafood for this influx is the “Golden Visa” rule whereby Portugal allowed foreigners who purchase sufficiently expensive real estate to obtain a residency visa for renewable for five years, at which point they can begin the process of obtaining citizenship. Already a popular retirement destination for the British, Germans, and other EU sun-seekers, a new wave of Chinese, Russian, Arab, and North American money began to flow when the rule was enacted in 2012. Not surprisingly, Portugal, in the words of global law firm DLA Piper, “is currently considered by many to be the most attractive country in Europe for foreign investment.”
  • what we do well is hospitality, and natural beauty, and sardines
  • The price of real estate, especially in popular tourist destinations like Lisbon, Porto, and the sandy shores of the Algarve, has skyrocketed. This trend is not consistent with a country that prides itself on holding down the cost of living. Angry at seeing the prospect of homeownership—or even a reasonable tenancy—pushed over the horizon, groups like Stop Despejos (“Stop Evictions”) and Morar em Lisboa (“Live in Lisbon”) have held protests and disrupted new developments.
  • The idea that Portugal, besides being an attractive place to retire to, is also emerging as a model for smaller European countries has stoked national pride
  • Portugal remains burdened with a lot of government debt: about 155 percent of GDP at the end of 2020, according to the Organisation of Economic Cooperation and Development. That’s a lot of debt, but it follows an economic crisis that demanded spending. And again, it’s not the 236 percent of GDP that burdens Greece or even the 160 percent of GDP hovering over the United States.
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