Increased trade and financial integration, and later on the commitment to becoming a founding member of the monetary union, provided a critical “stick and carrot” for Portugal to follow a path based on the prevalence of market mechanisms and on the pursuit of macroeconomic stability.
Today the economy is expanding at its fastest pace in many years, and the labor market is strong. As always, challenges remain. Both the initial shutdown and the subsequent reopening of the economy were without precedent. The economy has rapidly gained strength despite the ongoing pandemic, giving rise to persistent supply and demand imbalances and bottlenecks, and thus to elevated inflation.