While it seems many in the punditry have been slow to notice, quarterly GDP resumed growing in the second quarter of 2013.
Exhibit 2: Portugal GDP (Year-Over-Year and Quarter-Over-Quarter)
Source: FactSet, Portugal GDP, Q2 2009-Q4 2013.
Today, unemployment is down two percentage points from its peak. Since July 24, 2012, Portuguese stocks are up 74%, in line with other eurozone nations but a whopper of a rally as stocks anticipated a return to economic growth. While some suggest exports are to thank for this revival, exports grew pretty much throughout the crisis. Imports -- a sign of domestic demand -- grew in the last six months reported. That's likely more telling about the cyclical change.
Exhibit 3: Portugal Exports and Imports, Year-Over-Year Percentage Change
Source: FactSet, 05/2009-02/2014. As of 05/02/2014.
Passos Coelho's government survived numerous defections and challenges, pushing ahead with labor reforms and privatizations. State-run electricity grid operator REN and utility Energias de Portugal sold fast, raising more than expected and approximately 60% of the EU/IMF/ECB demands, decidedly unlike Greece's privatization -- slow and below troika demands. While the Constitutional Court did overturn some labor reforms, others remain:Public-sector severance pay was cut, public holidays were reduced from 14 to 10 and employment contract terms were loosened.
Skeptics remain. Some note debt is higher as a percentage of GDP than before the crisis. Reforms are incomplete. Bond markets could shift against Portugal. All true! But that these are the factors we're discussing today -- ifs and long-term factors -- are a clear sign sentiment has shifted. No longer is there intense fear the eurozone will suddenly fall apart. No longer are the fears so immediate and panicked. This is what sentiment looks like as a bull market matures.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.