Portugal Companies Continue To Take On Debt

Portugal, like much of southern Europe, is recovering from the global recession but still weak on its feet. The government has agreed to meet troika demands for deficit reduction, household debt continues to fall, and GDP growth is expected to be positive in 2014 if still low. But the private sector continues to leverage, even as consumer confidence is low and consumption is expected to stay flat.

“We consider that the corporate sector is far from having completed its adjustment, which will compound the impact of persistent fiscal austerity to drag on domestic demand,” writes Deutsche Bank economist Gilles Moec. “We expect only subdued GDP growth next year.”

Portugal tax increases

The problem is that companies...