Lisbon (AFP) - Portugal's Socialist party was Monday weighing alliances with other parties that would allow it to head a stable minority government as the country faces growing economic headwinds after it fell short of a parliamentary majority in a general election.
The party of Prime Minister Antonio Costa strengthened its position in parliament in Sunday's polls, winning 106 seats in the 230-seat assembly, up from 86 seats but still 10 shy of an outright majority.
Four seats still must be attributed according to the results of votes cast abroad which have yet to be counted.
In his victory speech, former Lisbon mayor Costa said he would try to "renew" his alliance with the two hard-left parties that propped up his government during the past four years -- the Left Bloc and the Communists.
But it remains to be seen what these two formations will demand in exchange for their support this time around since "all the dividends of this experience fell into the hands of the PS," daily newspaper Publico wrote in an editorial.
The Left Bloc won 19 seats -- the same number as in the 2015 election -- while the Communists took 12, down from 17.
But unlike in 2015 when the backing of these two parties was indispensable, this time around Costa will need the support of only one of them to reach a majority.
"The PS can swing between the two or play them against each other," Publico said.
New allies?
Costa also has two other possible allies -- the People Animals Nature party (PAN) which had just one lawmaker in the assembly and now has four, and upstart eco-socialist party LIVRE (free), which entered parliament for the first time with a single seat.
Another option for Costa would be to forgo a formal alliance with other parties and negotiate support to pass legislation on a case-by-case basis.
Since the Socialists won more seats than all centre-right parties combined, he could approve bills if other left-wing parties abstain from voting. But this strategy carries risks.
Costa "now faces a clearer political field" but the "sailing is more likely to lead to early elections," wrote business daily Jornal de Negocios.
While Costa has boosted his position in parliament, "the uncertainty is greater today because we do not know what will come out of these elections," economist Joao Duque told AFP.
'Difficult measures'
"Everything will depend on the evolution of the economy," which is slowing worldwide, said political scientist Antonio Costa Pinto.
Costa will face headwinds trying to deliver on campaign promises to boost disposable income while also protecting public finances, he said.
Under Costa's watch the budget deficit fell to nearly zero, the lowest level since Portugal returned to democracy in 1974.
"If the economy deteriorates, it will be harder for him to obtain the support of other (left-wing) parties, because no one will want to cooperate when it comes time to approve difficult measures" to reduce spending, Teneo analyst Antonio Barroso told AFP.
Costa took power four years ago on a promise to "turn the page on austerity" introduced during Europe’s debt crisis, when Portugal needed an international bailout.
Both the Left Bloc and the Communists have laid down demands for further hikes to the minimum wage and increased investment in public spending.
"The coming years won't be easy," Portugal's conservative President Marcelo Rebelo de Sousa warned Sunday as he cast his ballot.
He is expected to charge Costa with forming a new government after meeting Tuesday with the leaders of all parties that won representation in parliament.
