"Portugal was the only country really rattled by the downgrade because it is seen as a much more complicated case," said Gilles Moec, senior European economist at Deutsche Bank. "It combines the same high level of private sector over indebtedness as Spain, high public sector debt similar to Italy, plus the economic recession."
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Elisabeth Afseth, fixed-income analyst at Investec Capital Markets in London, said Portugal's problem relates to its high level of debt, currently around 100 percent of gross domestic product, combined with low growth.
"There are not a lot of countries that have managed over time with that kind of debt," said Afseth. "Financial markets won't give Portugal that time, the question is if Europe will give it that time."
Has Portugal's debt default clock begun to tick?
By Axel Bugge
LISBON
Fri Jan 20, 2012 12:40pm EST
In REUTEURS
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