PORTUGUESE ECONOMY REMAINS BUOYANT DESPITE CRISIS
  Portugal's economy, which has been
  enjoying one of its most buoyant periods in more than a decade,
  may now be strong enough to shrug off the country's latest
  government crisis, analysts said.
      But the April 3 ousting of Prime Minister Anibal Cavaco
  Silva's government could slow economic reforms and investment
  as Portugal continues to adapt to membership in the European
  Community, which it joined in January last year, they said.
      Cavaco Silva's minority Social Democratic Party, PSD, was
  toppled in a parliamentary censure vote by left-wing parties.
      The centre-right administration had made economic growth
  reform a priority in its 17 months in office.
      In 1986, Portugal's economy grew four pct, its current
  account surplus swelled to more than one billion dlrs and
  inflation fell to 10 pct, from 20 pct in 1985.
      Analysts and businessmen said the prospects of instability
  were worrying but they felt the foundations for continued
  growth had not been badly shaken.
      "The economy has developed a certain self-confidence that is
  now less dependent on the political situation," said Fritz
  Haser, economics professor at Universidade Livre, Lisbon.
      "The market doesn't see this as a real crisis yet," economist
  Jorge Braga de Macedo told Reuters.
      Businessmen have identified political instability over the
  last 13 years as one of the biggest obstacles to lasting
  economic progress.
      The PSD administration was the 16th formed since the 1974
  revolution.
      Portugal's developing stock markets, however, remain
  buoyant. Brokers and unit trust managers said the recent surge
  in economic confidence under the PSD rule was still largely
  underpinned by continuing optimistic forecasts.
      Investment grew nearly 10 pct in 1986 and a Bank of
  Portugal forecast, released on the day the PSD government fell,
  predicted the pace of investment and overall economic growth
  would remain at similar levels this year.
      But analysts said the crisis interrupted current policies
  and could slow economic development.
      Soares, who is expected to announce a decision by the end
  of the month, can either call early elections or form a new
  government from parties in the existing left wing-dominated
  parliament.
      Many businessmen said they strongly favoured quick
  elections as the best solution. "There is a good chance that a
  majority government could result from early elections,"
  Confederation of Portuguese Industry (CIP) president Pedro
  Ferraz da Costa said.
      He said they were optimistic this could mean the
  continuation in the near future of liberalisation policies
  introduced over the last year.
      The left-wing parties favour a parliamentary solution, but
  the PSD said it wants an early election in which opinion polls
  say they could win an overall majority.
      A PSD majority would also open the way for more
  wide-ranging reforms, such as relaxation of labour laws and
  possible denationalisation of industry, the analysts said.
      Cavaco Silva has accused the left-wing opposition parties
  of blocking key economic reforms.
      The left-wingers said Portugal's positive economic results
  were more the product of favourable international conditions
  such as cheaper oil and raw material imports, than of PSD
  policies.