The increase in indebtedness and decrease in saving were mainly used to finance consumption and low-return investments, and therefore did not result in the expansion of the economy’s growth potential. The strong increase in private spending translated into a deviation of resources to the non-tradable sector and persistent current account deficits. These imbalances were aggravated by unsustainable budgetary policies.
Between 1999 and 2010, the annual budget balance was on average –5% of GDP, and according to current data, the deficit was never lower than 3% of GDP. This behaviour is not very different from that observed since 1977. In the first 10 years of monetary union, the current and capital accounts had an average annual deficit of 8.3% of GDP.