[...]Portugal's problems do not lie in its lack of competitiveness – a report by the World Economic Forum in 2005 ranked Portugal for competitiveness above Spain, Ireland, France and Hong Kong. It is its membership of the Eurozone that is the source of Portugal's problems. Portugal joined the Euro at a very uncompetitive rate that reflected the strength of the German and French economies.
Up until recently the Euro increased in value to most major currencies since its inauguration making weaker economies such as Portugal very uncompetitive. Since joining the Euro Portugal has seen unemployment go from 5% to over 11% and its economic growth rates well below those of the Eurozone as whole.
To compensate for the structural weakness of the Portuguese economy caused by the strength of the Euro, Portuguese governments increased its public sector and promoted personal debt to sustain demand in the private sector. As a consequence the current account deficit has been running at a near 10 per cent for several years.
The private sector is dominated by the service industries which have been hit by the credit freeze from the banks and the deep recession in Spain who are Portugal's largest trading partner. The agriculture and fisheries industries employ 13 per cent of the workforce but make up only 4 per cent of the GDP and contribute to a low wage economy – average wages in Portugal are Euro 804 a month with the minimum wage being Euro 475 a month.
The Portuguese people are not responsible for the crisis – it is the membership of the Eurozone and the politicians that took them into it who are to blame. [...]
Up until recently the Euro increased in value to most major currencies since its inauguration making weaker economies such as Portugal very uncompetitive. Since joining the Euro Portugal has seen unemployment go from 5% to over 11% and its economic growth rates well below those of the Eurozone as whole.
To compensate for the structural weakness of the Portuguese economy caused by the strength of the Euro, Portuguese governments increased its public sector and promoted personal debt to sustain demand in the private sector. As a consequence the current account deficit has been running at a near 10 per cent for several years.
The private sector is dominated by the service industries which have been hit by the credit freeze from the banks and the deep recession in Spain who are Portugal's largest trading partner. The agriculture and fisheries industries employ 13 per cent of the workforce but make up only 4 per cent of the GDP and contribute to a low wage economy – average wages in Portugal are Euro 804 a month with the minimum wage being Euro 475 a month.
The Portuguese people are not responsible for the crisis – it is the membership of the Eurozone and the politicians that took them into it who are to blame. [...]
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