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While we are playing austerity, the real issue that will bring down the Portuguese economy is still around the corner. This is not just a Portuguese issue, and it affects Germany as much as the PIGS (not Ireland who, as good Catholics, still have babies).
This (the red line) is an estimate of the population going forward. Data was taken from Pordata and I just project birth and death rates forward assuming that all of the deaths happen in old people. It is a rough estimate, which is why I drew it in this "hand-drawn" style. One particular misestimation is that it assumes forward the average birth rate of the years 2005-2010, which is higher than it was in 2011 (and 2012 will likely be even lower). Still, we can expect that over the next 10 years or so, population will be stable, and then a crash starts, where Portugal loses about 1 million every 10 years (that's 100,000 people, a medium-sized town, per year).
The blue line shows a sort of dependency ratio. This is the number of people over 65 divided by the number in the ages 20-65 (all people in these ages, many of which might not be working). Around 2035, there will be 1 person over 65 for every person in the age group 20-65!
Let me repeat that: if the current trends continue, we can expect that around 2035 (and henceforth, forever), there will be one person over 65 for each person in the age group 20-65.
The migratory balance is probably now a net negative (more people moving out of the country as moving in), so that's another net negative.
Another thing that I actually did not realise is how far back the drop in fertility goes. Here is the curve of births per 1000 from 1960 (the earliest year in Pordata's data) to last year:
(The script to generate these plots is here)
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