<p>Greece had more debt, less growth and higher budget deficits than Portugal throughout the crisis. </p>

<p><a href="https://i.sstatic.net/s89mB.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/s89mB.png" alt="enter image description here"></a></p>

<p><a href="https://i.sstatic.net/z1tSC.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/z1tSC.png" alt="enter image description here"></a></p>

<p><a href="https://i.sstatic.net/ou73T.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/ou73T.png" alt="enter image description here"></a></p>

<p><a href="https://i.sstatic.net/NmSlH.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/NmSlH.png" alt="enter image description here"></a></p>

<p>As a result, the Greek bailout should have been even bigger, but this was politically untenable, while the Portuguese bailout proved sufficient in size. </p>

<p>The lower budget deficits in Portugal, for example, also made it easier to comply with the austerity imposed by international organisations. </p>

<p>The Portuguese economy was also better able to adjust by virtue of being more competitive. It was recently ranked 38 on competitiveness vs Greece ranked 81.</p>

<p><a href="http://reports.weforum.org/global-competitiveness-report-2015-2016/competitiveness-rankings/" rel="nofollow noreferrer">http://reports.weforum.org/global-competitiveness-report-2015-2016/competitiveness-rankings/</a></p>

CC BY-SA 3.0
2017-08-22T08:19:56.053Z
@Andras would default have been a more effective option in Greece's case? [a source](https://www.penguin.co.uk/books/1113208/adults-in-the-room/)
Harry de winton
CC BY-SA 3.0
2017-08-22T09:16:19.797Z
In practice, Greece *has* defaulted: 50% haircut on €200bn debt in 2011. But it happened (1) in a controlled manner (2) on the lenders' terms. The significance of (1) is that in retrospect letting Lehman Brothers go bankrupt was a bad idea, outfall from an uncontrolled default was avoided for Greece. The significance of (2) is that Greece was left with a lot of debt even after the haircut, so international organisations continued to have leverage on them and push through "reforms" (or "push through their own agenda" - depending on what view you take on the efficacy of their policies).
M3RS
CC BY-SA 3.0
2017-08-22T09:22:30.870Z
Could they have defaulted on their own terms? Maybe, but nobody had the guts to pull the trigger and go rouge. In the midst of the eurozone crisis and given Greece's EU/eurozone membership and all the interlinkages this would have been an extremely radical move with unclear consequences. Would the EU/eurozone have retaliated and how, for one?
M3RS
CC BY-SA 3.0
2017-08-22T10:37:41.930Z
@Andras Excellent answer!!  - but was letting Lehman Brothers go bankrupt such a bad idea in the longer term? and by extension would it be so bad for Greece?  (I realise this is a very hypothetical question)
Harry de winton
CC BY-SA 3.0
2017-08-22T10:47:09.653Z
I think what you are getting at is whether if Greece had defaulted on their own terms, would they be better off now? I agree that this is quite possible, but these decisions are not made in a vacuum. Just imagine you are the Greek prime minister, you want to default, while the IMF, Germany, France, EU institutions, the ECB telling you not to... in fact Syriza had to do an about face. The threat was that they'll be kicked out of the eurozone and they bucked at the end, accepted the troika terms. Now, would they be better off outside the eurozone? Yes, it's possible, but nobody dared to try.
M3RS
CC BY-SA 3.0
2017-08-23T11:28:11.590Z
@Harrydewinton the privatization of Greece would have meant a huge loss for the German and French governments and funds, who were the debtors of the Greek public debt - so it wasn't in the interest of the "EU" that Greece would default, no matter what social cost that takes.
JoaoBotelho
CC BY-SA 3.0
2017-08-21T21:20:12.980Z
2017-08-22T06:14:20.303Z
2017-08-22T06:14:20.303Z
M3RS
<p>While Greece has required several bail-outs and is on the <a href="http://www.bbc.co.uk/news/business-39933638" rel="nofollow noreferrer">brink of falling back into recession</a>, the Portuguese economy has <a href="https://www.ft.com/content/ea7f2a22-4219-11e7-82b6-896b95f30f58?mhq5j=e1" rel="nofollow noreferrer">seemingly recovered</a>.</p>

<p>Why has recovery gone so well in Portugal but failed abysmally in Greece, even though seemingly similar institutions and approaches where taken to both?</p>

<p>(or are we somehow deluded about Portugal's long term recovery and or Greece's problems) </p>

CC BY-SA 3.0
2017-08-23T11:24:23.413Z
Just wanted to note that Portugal's recovery went well in GDP terms (for the debtors), but had a dramatic impact on the population. Unemployment increased severely, which forced a significant part of the young population to emigrate - you can take a look here at population and unemployment data: https://data.oecd.org/portugal.htm
Average cost of labour also decreased in the period, meaning people actually got lower salaries.
Also several short term gains were made, which doesn't lead to a sustainable recovery - such as sale of golden visas to foreign citizens, or the privatization of energy.
JoaoBotelho
<government-debt><government-spending><portugal><greece>
Why did the Greek bailouts "fail" whereas the Portuguese bailouts succeeded?
Harry de winton
# Why did the Greek bailouts "fail" whereas the Portuguese bailouts succeeded?

(Asked by: username_0 on 2017-08-17)

While Greece has required several bail-outs and is on the [brink of falling back into recession](http://www.bbc.co.uk/news/business-39933638), the Portuguese economy has [seemingly recovered](https://www.ft.com/content/ea7f2a22-4219-11e7-82b6-896b95f30f58?mhq5j=e1).

Why has recovery gone so well in Portugal but failed abysmally in Greece, even though seemingly similar institutions and approaches where taken to both?

(or are we somehow deluded about Portugal's long term recovery and or Greece's problems)

**Tags:** government-debt, government-spending, portugal, greece
> **Comments:**
> **username_1**: Just wanted to note that Portugal's recovery went well in GDP terms (for the debtors), but had a dramatic impact on the population. Unemployment increased severely, which forced a significant part of the young population to emigrate - you can take a look here at population and unemployment data: https://data.oecd.org/portugal.htm Average cost of labour also decreased in the period, meaning people actually got lower salaries. Also several short term gains were made, which doesn't lead to a sustainable recovery - such as sale of golden visas to foreign citizens, or the privatization of energy.  

---

## 1 answers

### Answer by username_2 on 2017-08-21. Score: 4 | Accepted answer

Greece had more debt, less growth and higher budget deficits than Portugal throughout the crisis.

[![enter image description here](https://i.sstatic.net/s89mB.png)](https://i.sstatic.net/s89mB.png)

[![enter image description here](https://i.sstatic.net/z1tSC.png)](https://i.sstatic.net/z1tSC.png)

[![enter image description here](https://i.sstatic.net/ou73T.png)](https://i.sstatic.net/ou73T.png)

[![enter image description here](https://i.sstatic.net/NmSlH.png)](https://i.sstatic.net/NmSlH.png)

As a result, the Greek bailout should have been even bigger, but this was politically untenable, while the Portuguese bailout proved sufficient in size.

The lower budget deficits in Portugal, for example, also made it easier to comply with the austerity imposed by international organisations.

The Portuguese economy was also better able to adjust by virtue of being more competitive. It was recently ranked 38 on competitiveness vs Greece ranked 81.

<http://reports.weforum.org/global-competitiveness-report-2015-2016/competitiveness-rankings/>

> **Comments:**
> **username_0**: @Andras would default have been a more effective option in Greece's case? [a source](https://www.penguin.co.uk/books/1113208/adults-in-the-room/)  
> **username_2**: In practice, Greece *has* defaulted: 50% haircut on €200bn debt in 2011. But it happened (1) in a controlled manner (2) on the lenders' terms. The significance of (1) is that in retrospect letting Lehman Brothers go bankrupt was a bad idea, outfall from an uncontrolled default was avoided for Greece. The significance of (2) is that Greece was left with a lot of debt even after the haircut, so international organisations continued to have leverage on them and push through "reforms" (or "push through their own agenda" - depending on what view you take on the efficacy of their policies).  
> **username_2**: Could they have defaulted on their own terms? Maybe, but nobody had the guts to pull the trigger and go rouge. In the midst of the eurozone crisis and given Greece's EU/eurozone membership and all the interlinkages this would have been an extremely radical move with unclear consequences. Would the EU/eurozone have retaliated and how, for one?  
> **username_0**: @Andras Excellent answer!!  - but was letting Lehman Brothers go bankrupt such a bad idea in the longer term? and by extension would it be so bad for Greece?  (I realise this is a very hypothetical question)  
> **username_2**: I think what you are getting at is whether if Greece had defaulted on their own terms, would they be better off now? I agree that this is quite possible, but these decisions are not made in a vacuum. Just imagine you are the Greek prime minister, you want to default, while the IMF, Germany, France, EU institutions, the ECB telling you not to... in fact Syriza had to do an about face. The threat was that they'll be kicked out of the eurozone and they bucked at the end, accepted the troika terms. Now, would they be better off outside the eurozone? Yes, it's possible, but nobody dared to try.  
> **username_1**: @Harrydewinton the privatization of Greece would have meant a huge loss for the German and French governments and funds, who were the debtors of the Greek public debt - so it wasn't in the interest of the "EU" that Greece would default, no matter what social cost that takes.  

---

