Clear signs of improvement in Portugal.

During the 1990s, Portugal's economy grew rapidly and the country was the subject of very favorable reports in the international financial press. Consumers did well. From 1996 through 1999 per capita income, according to International Monetary Fund (IMF) statistics, grew an annual average of 5.2 percent. The lowest year was 5.0 percent, and two of the years reached an annual increase high of 5.4 percent.

Portugal's progress began to flag at the start of the new millennium. GDP expansion slowed significantly, and in 2003 the economy actually contracted minus 0.7 percent. Per capita income in 2003 grew only 0.2 percent.

An online ACNielsen consumer confidence survey released in July 2007 said, "In Portugal--which has consistently ranked as the world's most pessimistic nation since the Nielsen Global Consumer Confidence Index was launched--the gloom continues, with one in four Portuguese consumers (25 percent) saying they have no spare cash after paying for essential living expenses." It is well to note that because the survey is done online, this is likely a sampling of the more affluent consumers.

But as of this writing, late July 2007 (the survey was conducted between May 2007 and June 2007) there are signs that things in Portugal are about to change.

The first sign comes from a June 26, 2007 posting on the IMF's website--a review of a recent consultation with the Portuguese government. The IMF says, "The economy is finally picking up. A modest, and cyclical, recovery is underway, led by strong external demand, which is driving a notable rebound in export growth."

Consumers are still not trusting that the worst is over, however. Eurostat's release of Portugal's July 2007 consumer confidence index shows the index at its second lowest point for 2007, a minus 33.0, down from minus 32.8 in June 2007. (The lowest for 2007 so far is April 2007's minus 33.5.)

Market: Europe plotted a trend line with Eurostat's Portuguese confidence statistics for 2007 and it showed a downward sloping line.

But other Eurostat numbers were more encouraging. The retail confidence index although declining to minus 14.6 in July 2007 from minus 10.2 in June 2007 produced an upward sloping trend line for 2007.

And Eurostat's economic sentiment index for Portugal was over 100 for every month except January 2007. It produced a trend line that sloped sharply upward.

The IMF credits "decisive action" taken by the government to correct "imbalances accumulated during the 1990s."

Among those imbalances is the unequal distribution of wealth. "According to most indicators, Portugal is one of the countries with the highest inequality levels among developed countries." (Source: A February 13, 2007 University of Madeira research paper.)

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