Portugal's Economic Crisis

I was searching for an interesting article in regards to Portugal's Economy and came across one posted on the New York Times website. The article discussed Portugal's present economic struggles. Portugal's economy was once based on low labor costs, however now as a result of the eastward expansion of the European Union, Portugal is finding it hard to compete with their neighbors. In the past decade Portugal has experienced flat growth. Portugal as well as Spain and Greece has gathered soaring debt. Their deficit and credibility gap has been undermining confidence in the euro. Last year Portugal's deficit reached 9.3 percent of gross domestic product compared to a 3 percent ceiling set by the European Monetary Union. In February, markets took a hit for the worst after the commissioner for European Economic and Monetary Affairs, Joaquín Almunia, listed Portugal, along with Greece and Spain as countries that had shown a permanent loss of competitiveness. Portugal’s debt is expected to rise to 85 percent of gross domestic product this year, from 76.6 percent in 2009, because of rising unemployment and government spending on infrastructure projects like dams, hydroelectric power systems and a high-speed rail line to Madrid. The Prime Minister, Jose Socrates is doing his best in supporting the transition of Portugal's economy from low-cost manufacturing to knowledge-based industries. In five years, he claims, Portugal has become a European leader in renewable energy. It has also cut civil-service jobs from 747,000 to 675,000. It sends some 35% of its young people to university. It is investing over 1.5% of GDP in research, much more than Spain. Now that I am informed on Portugal's economic status I am more inclined to follow their success and improvements in the years to come.
http://www.nytimes.com/2010/02/10/world/europe/10portugal.html
http://www.economist.com/world/europe/displaystory.cfm?story_id=15959527