4. Portugal’s Economic Crisis: Overheating Without Accelerating

Portugal’s economic crisis was characterised by the experience of ‘all of the signs of overheating … without any acceleration of GDP’ (Deutsche Bank 2010). This chapter traces how the introduction of European Community/European Union (EU) facilitated ‘structural reforms’ throughout the 1980s and 1990s contributed to the development of new and dangerous patterns of debt-led growth. In the 1990s, a rejuvenated private banking sector drove the expansion of economic growth in Portugal’s non-tradable sector, damaging the country’s competitiveness and creating some of the highest levels of private debt in the EU. This trajectory of economic growth contributed to a decade of recession in the 2000s, ensuring that Portugal was particularly vulnerable to contagion from the Greek and Irish crises from 2010 onwards.