Portugal regains credibility on the markets

<h4>Can we already say that Portugal is no longer one of the European Union's poor performers&quest; Which countries are today&comma; from a financial point of view&comma; the eurozone's new weak links&quest;</h4>&NewLine;<p>Rémi Bourgeot &colon; Portugal has come a long way&period; It hasn't really been one of the Troika's "bad pupils" for several years now&comma; since it applied the austerity cure without flinching too much in exchange for a 75 billion euro aid program&period; Portugal has even had the "luxury" of an anti-austerity coalition government since 2015, which has&comma; at least on some spending&comma; departed from the fiscal policy that had been imposed&period; The country has benefited from a sequence that has helped limit the damage&period;</p>&NewLine;<p>The austerity cure was substantial, but less unreasonable than in the case of Greece, and the country was able to exit the program&comma; sheltered from the ECB's ultra-expansionary policy&comma; when many thought a second would be necessary&period; The collapse in borrowing rates enabled Portugal to refinance its debt directly on the markets&comma; with rates falling much faster than would have been possible simply on account of economic improvement&period; Despite the acceleration in growth and the massive drop in unemployment from over 16% during the crisis to less than 9% today, Portuguese debt remains at very high levels, at around 130% of GDP. S&P's decision to upgrade Portugal's rating to investment grade reflects this generally positive dynamic, particularly in terms of growth;</p>&NewLine;<p>Economic conditions have generally improved in Europe&comma; in particular thanks to the ECB's massive purchasing program and the euro's depreciation since 2014&period; This recovery and liquidity have supported just about every country in the South&comma; but the situation remains bad&period; The banking crisis has not been resolved&comma; in particular in the Italian case&period; As we have seen over the year&comma; the rules of the banking union, which consist in calling in the banks' creditors, remain inapplicable, and the States are still on the front line&period; Italy, but also Spain&comma; and even Portugal&comma; remain major sources of concern in this respect&period; In Greece&comma; the situation has improved, with a return to growth after a veritable depression which saw the country lose a quarter of its economic activity, but the situation remains very dilapidated&comma; despite this somewhat mechanical rebound after such a serious crisis&period;</p>&NewLine;<h4>The rating agency considers the country's outlook stable and is optimistic about its growth over the 2017-2020 period&period; What about the other members of the PIIGGS&quest; Are other troubled countries experiencing similar dynamics&quest;</h4>&NewLine;<p>The improvement in economic conditions is fairly widespread among the so-called peripheral countries&period; This is not a situation unique to Portugal&period; Most countries have benefited in recent years from the alignment between considerable monetary support&comma; and a gradual exit from the most severe austerity measures&comma; not to mention falling commodity prices, which have benefited importers&period; This improvement should not, however, blind us to the structural problems affecting the eurozone&period; The banking crisis mentioned earlier is a key point&comma; and more generally, monetary union is still not truly equipped for times of crisis&period; We will see&comma; as soon as the next crisis hits, we'll see a resurgence of concerns that we thought had been definitively overcome&period; The ECB has to some extent changed its nature by becoming a genuine central bank ready to support public debt to ensure the survival of the currency in its care&period; A change of leadership at the head of the institution may somewhat call this achievement into question&period; But above all&comma; the banking union has not really been implemented&comma; in particular with regard to the absence of a common guarantee for bank deposits&period; and it is clear that the proposals for a substantial common budget put forward by Emmanuel Macron have hit a brick wall&period; Everything is getting better and better&comma; on the basis of a situation that is nevertheless very deteriorated... and until the next crisis&period;</p>&NewLine;<h4>S&amp&semi;P downgraded the EU on June 30&period; Can Portugal's recovery reverse this trend&quest;</h4>&NewLine;<p>S&amp&semi;P had downgraded the EU's rating on June 30, 2016, in the wake of the Brexit vote, from AA&plus; to AA&period; On the one hand, the agency had highlighted the challenge to the Union's cohesion illustrated by the British vote&period; On the other, it acknowledged the budgetary difficulties that the departure of the United Kingdom represents for the EU&period; Moreover, even the downgraded rating was accompanied by a stable outlook, and was still based on the idea that the UK's budgetary contribution would be honored&period; A chaotic exit following a breakdown in negotiations in particular could change the situation&comma; but we're not there yet&period;</p>&NewLine;<p>Beyond the Brexit issue&comma; the economic recovery that Europe is currently experiencing is generally supporting the EU's creditworthiness&comma; which is estimated to be close to that of its most creditworthy members&period; The improvement in Portugal's rating does not have a significant impact on the EU's rating, but it illustrates this more general trend&comma; the limit of which still lies in the structural fragilities of European construction&comma; particularly from a monetary point of view&period;</p>&NewLine;<p><a href="http&colon;//www&period;atlantico&period;fr/decryptage/portugal-redevient-credible-marches-qui-sont-nouveaux-maillons-faibles-zone-euro-remi-bourgeot-3168325&period;html/page/0/1" target="&lowbar;blank" rel="noopener">Source</a></p>&NewLine;<p>&nbsp&semi;</p>&NewLine;

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