LISBON - The center-left Socialist Party collected the most votes in Portugal's general election Sunday, an exit poll indicated, leaving it poised to continue in government for another four years.
However, with the exit poll predicting they would get between 36-40% of the vote, the Socialists could fall short of a majority in parliament.
That could mean they have to pursue alliances with other left-of-center parties, as they did in their last term with the Portuguese Communist Party and the radical Left Bloc, to pass legislation.
The poll says the main opposition center-right Social Democratic Party will get 24-28%. It gives the radical Left Bloc 9-12%, the Portuguese Communist Party 5-7% and the Christian Democrats 2.4-5%
Socialist leader and incumbent prime minister Antonio Costa took power four years ago on a promise to undo austerity measures introduced during Europe's financial crisis, when Portugal needed an international bailout.
Now his government is set to reap the rewards of an economic rebound in recent years. Growth climbed from 0.2% in 2014 to 2.1% in 2018, and unemployment dropped by around half, to 6%, over that period.
As other Socialist parties have lost ground across Europe in recent years, Costa's administration has proved wrong the doubters who said it would overspend and endeared itself to its European Union partners by straightening out Portugal's ill-managed public finances.
The budget deficit _ long a torment for Portugal as governments routinely overspent _ is now close to zero under the financial stewardship of Finance Minister Mario Centeno, who also chairs the meetings of finance ministers from the 19 European nations that used the shared euro currency.
Centeno is expected to continue in the post.
The Social Democrats are still associated in the public mind with deep cutbacks and a three-year recession that ended in 2014, when they were in government. Also, party leader Rui Rio has struggled to contain disagreements between factions of his party.
Smaller, fringe parties may also gain a handful of seats in the 230-seat Republican Assembly, the country's parliament, which will elect the next government. The country's president is mostly a figurehead.
Portugal hasn't witnessed the rise of populist or far-right parties which have risen to prominence elsewhere in the EU. Protests in Portugal are traditionally channeled into a low turnout _ the exit poll said it could be a new low of around only half the country's 10.8 million eligible voters.
The next government faces plenty of challenges, including the United Kingdom's impending departure from the EU. The U.K. is one of Portugal's main export markets.
While government spending is now more in line with revenues, Portugal's government debt is equivalent to more than 120% of gross domestic product _ the third highest in the EU. And the combined government, private and corporate debt is more than three times the country's GDP, the Bank of Portugal says. If European interest rates rise, the Portuguese could find themselves in big trouble.
Other challenges include climate change, as rainfall in the southern half of the country dwindles, and an aging population that threatens the financing of the welfare system. The EU says that at current fertility rates the number of Portuguese will decline from 10.3 million this year to 6.6 million in 2100.