Portugal holds a general election Sunday when the country's 9.7 million eligible voters choose a government for the next four years. Here are some of the issues:



Portugal is one of the eurozone's smaller economies, representing less than 2 percent of the 19-nation bloc's gross domestic product. But when things go wrong, it can feel much bigger.

Portugal's near-bankruptcy in 2011 amid the eurozone debt crisis, which also knocked the wind out of Greece and Ireland, generated fears of a domino effect that threatened its larger neighbor Spain.

In the end, a 78 billion euros ($87 billion) bailout and deep cuts to pay and pensions, steep income tax increases and cuts in public services — as well as the European Central Bank's stimulus programs — were enough to reassure investors to resume lending to debt-heavy Portugal.

The economy is now recovering. After three years of recession, it grew 1.5 percent in the first half of this year compared with the same period in 2014. The unemployment rate has fallen from a record 17.7 percent in 2013 to 12.3 percent last July.

The danger is that any sign of political instability or new debt concerns in Portugal could re-ignite market worries about the euro's future and undermine other countries in the bloc.

"The situation is still very fragile in budget and economic terms," says Joao Cesar das Neves, an economics professor at Lisbon's Catholic University. Portugal "has come out of its coma but is still under observation."



At the heart of the campaign is one word: austerity.

To climb out of their debt hole the eurozone countries adopted a German-led remedy of government spending cuts and tax increases. Critics of that approach say government spending should spur the growth that will help pay off debts.

Portugal's center-right coalition government, made up of the Social Democratic Party and its junior partner, the Popular Party, has sided with German Chancellor Angela Merkel. It refuses to promise lower taxes, but says it will ease the fiscal burden as the economy improves.

The center-left Socialist Party, the main opposition force, wants to "turn the page on austerity" by encouraging people to spend more. To do that, it wouold trim social security tax and restore government workers' pay that was cut, among other belt-loosening measures.

Austerity is "the decisive issue," says Cesar das Neves. "Everyone's concerned about jobs, economic growth, whether they can get back some of the things they've lost."



Unlike in other eurozone countries, where austerity-minded governments felt a backlash at the ballot box, the Portuguese appear to have no appetite for political upheaval.

Polls show the race between the current government and the Socialists is tight, with those rivals together collecting around 70 percent of the vote. Traditionally, the two mainstream — and moderate — parties have alternated in power. They say they are committed to the euro currency and its budget discipline.

The main worry is that the result could bring in a minority government that has no guarantee of passing its policies. The quest for the main parties is to collect an outright majority of 116 seats in the 230-seat Parliament. A grand coalition is unlikely.

Disaffected voters usually turn to the Communist Party, which is expected to achieve its usual support of around 10 percent of votes, and the newer Left Bloc, forecast to poll around 5 percent.

In all, 23 parties are fielding candidates, but it is likely that only five parties will get enough votes for seats in Parliament.

With some 20 percent of voters saying they are undecided, there is still room for a surprise outcome.



Pedro Passos Coelho or Antonio Costa.

Social Democratic leader Passos Coelho, the 51-year-old incumbent, has won praise by sticking to his guns amid fierce pressure to back down on austerity.

Socialist leader Costa, 54, is the hope of those who want to alleviate the tax burden and return to comprehensive public services.