Portugal set to keep faith with Socialists

Portugal goes to the polls on Sunday with voter satisfaction with Prime Minister Antonio Costa's record of economic growth set to propel his Socialists back into office for a second term.

Bucking a trend of declining centre-left fortunes elsewhere in Europe, the Socialists lead opinion polls with 37 per cent support, compared to 30 per cent for nearest rivals the centre-right Social Democrats (PSD) although the difference between the two parties has halved over the past three months.

If that is confirmed on election night the Socialists will fall short of a parliamentary majority, meaning Costa, a former Lisbon mayor of Indian origin, would once again need the support of at least one other party to govern.

"Unless there is a debacle on the part of the right, an absolute majority for the Socialist party seems unlikely," Antonio Costa Pinto, a politics professor and the University of Lisbon, told AFP.

After the last general election in 2015 in which the incumbent alliance made up of the PSD and the smaller conservative CDS-PP won the most seats but fell short of a majority, Costa convinced two smaller hard-left parties -- the Communists and the Left Bloc -- to support a minority Socialist government.

Portugal, hit hard by the eurozone debt crisis, had emerged the previous year from a three-year, 78-billion-euro (USD 85 billion) bailout with the European Union and IMF that required it to make deeply unpopular spending cuts, economic reforms and privatisations.

Costa's government moved quickly to undo some of the austerity measures imposed by his predecessors such as reversing cuts to public sector wages and pensions even as it took advantage of an economic recovery under way across Europe to continue to clean up the country's finances.

Portugal posted economic growth of 3.5 per cent in 2017 and of 2.4 per cent in 2018, its highest levels since 2000, while the jobless rate was more than halved to 6.4 percent in July, the level before the crisis.

The government is targeting a budget deficit of 0.2 per cent of GDP this year -- the lowest level since Portugal's return to democracy in 1974 -- and a surplus in the succeeding years.

The record defies Costa's critics who predicted that his alliance with the hard-left would lead to budget slippage and spook investors, damaging the economic recovery and leading Portugal once again to violate the strict limits on budget deficits imposed on nations that use the euro single currency.

"Four years later we can say: they got it all wrong! We are still in the eurozone and we have turned the page on austerity," he told a campaign rally on Tuesday in Aveiro, a central coastal city.

University of Lisbon political scientist Marina Costa Lobo said the left "had demonstrated that it is capable of governing as part of the eurozone, which is very demanding in terms of budgets."