Portugal’s unemployment rate sank to 16.4% in the second quarter from 17.7% in the quarter before, reversing what has been a steady upward march. It’s the latest sign of green shoots in the euro zone economy after six years of bad news. Portuguese officials hope that economic data will be enough to convince investors that it’s the right time to capitalize on cheap assets in a slowly rebounding Europe.
That said, it’s hard to overlook continuing problems in Portugal. Portugal’s banks will continue to count more bad loans on their books through 2014, according to analysts from Fitch Ratings Agency. Perhaps most importantly, an unstable government risks causing dissolution—and market angst—at any time.