The Order of Economists warns that the political crisis will seriously undermine the confidence of economic agents

The President of the Order of Economists, António Mendonça, warned this Saturday that the current political crisis will have a serious impact on the confidence of economic agents and could have dramatic consequences for the external image of the country.

In conversation with Lusa, António Mendonça believes that the consequences of the current political crisis “cannot but be enormous and at all levels.”

“As we often say in economics, negative externalities are huge and will have direct, indirect and other consequences,” he said.

The economic president believes that the economic consequences of the current context will be “important, especially in the context of the economic downturn and the threat of recession, as evidenced by the latest known data.”

The confidence of economic agents “will be seriously affected by the consequences of investment or spending decisions. The tendency to postpone decisions that has characterized the country in recent years or even decades will find a new excuse to continue,” he says.

According to António Mendonça, “the short term will continue to be the guideline, and the election results may further strengthen this culture, as we enter a period – which may be long – of political instability, fragmentation and succession of short cycles of governance, a situation that has already been discussed warned the President of the Republic himself in his speech at the recent Congress of the Order of Economists.”

The President also warns that “the consequences for the country’s external image could be dramatic” both “in terms of European institutions and the confidence with which they view relations with Portugal” and in terms of “the confidence of foreign investors who will seek to reconsider or postpone your decisions.”

“In such situations, it is extremely important to take responsibility on the part of all agents, political and economic in particular, and, above all, common sense,” he argues.

António Mendonça believes that “the manner in which the political crisis was provoked is extremely serious” and that “it is absolutely important that justice acts impartially, quickly and effectively” and “that all facts and related responsibilities are investigated objectively and in all their extent and depth” .

For the economist, “it is important to start thinking in terms of damage limitation,” first of all, “at the political level, with the real possibility of radically changing the political structure of the country, whether at the level of government or at the level of power relations between parties, whether within each party, that is of particular importance, obviously, for a party with a parliamentary majority.”

The President of the Republic, Marcelo Rebelo de Sousa, announced on Thursday that he would dissolve the Assembly of the Republic and call early elections for March 10, 2024.

However, he will delay the publication of the dissolution decree, which will allow for the final global vote on the government budget 2024 (OE2024), scheduled for November 29, which will guarantee approval by an absolute majority of the PS.

Prime Minister Antonio Costa asked the President of the Republic to resign on Tuesday.

António Costa became the subject of an investigation by prosecutors in the Supreme Court after suspects in a case linked to a business related to lithium, green hydrogen and the “Sines data center” named him as having interfered with unlocking procedures.

On the day of his dismissal, Antonio Costa refused to commit “any illegal or reprehensible act” and expressed his full willingness to cooperate with justice.