Portugal more exposed to US tariffs than other European countries says Nobel Prize economist

Nobel Prize winning economist Paul Krugman says Portugal is more exposed than larger European economies to US tariffs and that is a “cause for concern”.

Nevertheless, he highlights the “significant progress” that Portugal’s economy has seen since the April 25 Revolution which has enabled it to withstand several crises.

“How exposed is Portugal? I know that it is not totally dependent on tourists or US companies, but its importance means that it is probably more exposed than a larger-sized European country”, he said at a conference organised by the Bank of Portugal in Lisbon this week.

Paul Krugman said Portugal’s exposure was “concerning”, but that Portugal’s economy had emerged from the April 25 Revolution with resilience, and that had been evident from the way it had proved resistant to post-revolution economic instability, and more recently the financial crisis in 2008 and the ensuing sovereign debt crisis.

“Portugal’s GDP per capita is 155% greater than it had been in the middle of the 1970s”, he said, adding that significant progress had been made to converge with other EU economies, highlighting the progress that had been made on the economic, financial and social fronts.

In 1976, Krugman had been in Lisbon working in the Department of Economic Studies at the Bank of Portugal at a time when the governor was José da Silva Lopes. “I was 23 years old and very American; in other words very insular and ignorant about the world”, he said.

More than 50 years on, the economist warns that there are still concerns in relation to the Portuguese economy, namely the aging population and emigration of young people. But he said that Portugal had shown some “positive signs and that the working population had increased significantly in recent years”.

The Governor of the Bank of Portugal Mario Centeno said that before 1974 Portugal had been a backward country and that the revolution had been crucial to achieve current levels of development.

“The revolution was necessary for what followed” he said, noting that the Bank of Portugal was born out of the democratic revolution and created the conditions for it to become part of the Eurosystem”.