Costa’s election win offers hope for political stability in Portugal

Yesterday’s unexpected majority win for the Socialist Party paves the way for greater political stability in Portugal. This will simplify the government formation process, speed up approval of the 2022 budget, and facilitate Portugal’s implementation of its recovery and resilience plan and the unlocking of EU funds.

What you will learn:

• Along with strong carryover heading into 2022, we think this implies Portuguese GDP is well positioned to rise by more than 5% in 2022.
• Investors are likely to welcome Prime Minister António Costa’s decisive win, given his record on managing public finances and commitment to sound fiscal discipline.
• The result also provides a unique opportunity to fix some of Portugal’s economic vulnerabilities, though Costa’s track record on structural reforms has so far been more underwhelming.