According to the newspaper espressoAmerican economist Paul Krugman, who won the Nobel Prize in 2008, described Portugal as “a kind of economic miracle” in an interview with the Jornal de Negocios newspaper.
Expresso newspaper points out that Portugal has remained economically strong in recent years, with its performance better than most European countries, but this does not mean that the problems are over and that there are no risks.
Speaking about the risks of rising interest rates, Paul Krugman warned that “Portugal is not immune” to this problem, but “it may be able to overcome it, given that it has witnessed satisfactory economic growth.”
“For example, even the United States is not completely risk-free, but with strong economic growth there is a greater possibility of maintaining high interest rates on debt,” he said.
Italy, on the other hand, is more vulnerable because, in contrast to Portugal (for now), “there is no particular reason to believe that potential growth in Italy has increased much.” Therefore, given Portugal's performance in recent years, Krugman calls this success an “economic miracle.”
He explains that after the debt crisis, “Spain finally recovered economically, but after years of high unemployment rates, depreciation of the internal currency and falling costs.” Portugal, for its part, “recovered without it.”
Krugman also told the newspaper: “I had long conversations with my friend Oliver Blanchard, the former chief economist of the International Monetary Fund, and he said to me: ‘I don’t understand how Portugal could have gotten away with it either.’”
How did they do it? His explanation is the growth of tourism and exports, but he noted that in general how it all happens is “a bit of a mystery.”
As for future problems, Krugman noted that because Portugal is so closely linked to Europe, it may be affected, because “Portugal has done a very good job, but Europe has not.”
Compared to 2013 – the year Portugal was declared a poor country with structural problems – Krugman says the problems are “much less” today. “Portugal had a good period of economic success after the revolution and then stopped for a few years, but it seems that this stop has ended,” he said in the interview.
