Business Environment in Portugal
From the beginning of 2009, Portugal is in the core of a deep recession, caused by the collapse of foreign demand and the restrictive financial conditions that have affected all the sectors of the economy, such as exports and investments in particular. After it was contracted to 2.7% in 2009, the Portuguese economy has experienced a moderate growth again in 2010, estimated at 1.1% of the GDP.
Due to the increase in public expenditure aimed to support the economy, the budgetary situation was highly deteriorated, the deficit reached more than 7% of the GDP. The public debt has also experienced an important increase, surpassing 90% of the GDP for the first quarter 2011. Facing this situation, the government established a severe plan intended to control and to reduce expenditures through a fiscal tax increase. A large plan of privatization has also been launched in order to increase revenues. Structural measures were also announced, including a labor code reform that allows more flexibility. The country should receive a financial assistance from the EU and IMF, which could reach 80 billion EUR.
With an unemployment rate that has risen to around 10%, an increase of differences between the north and the south, and the erosion of the purchasing power, the social tensions have become evident in Portugal.
|GDP (billions USD)||234.09||229.34e||236.15||237.47e||241.69e|
|GDP (Constant Prices, Annual % Change)||-2.5||1.4e||-1.5e||-0.5||0.9|
|GDP per Capita (USD)||22,028||21,559||22,157||22,245||22,608|
|General Government Balance (in % of GDP)||-7.3e||-6.7||-3.2e||-2.5||-2.9|
|Inflation Rate (%)||-0.9||1.4e||2.4||1.4e||1.4e|
|Unemployment Rate (% of the Labor Force)||9.6||11.0||11.9e||12.4||11.9e|
|Current Account (billions USD)||-22.92||-20.28||-23.13e||-22.60||-|
|Current Account (in % of GDP)||-10.1||-9.0||-10.2||-9.8e||-|
Source: IMF - World Economic Outlook Database
Note: (e) Estimated Data
Main Sectors of Industry
The agricultural sector is not so productive because it is less mechanized; it represents a little over 2% of Portugal's GDP and employs 11.5% of the population. The main productions are cereals, fruits, vegetables and wine. The exports of Port wine represent 1.4% of total exports. Portugal has many natural resources. The mining sector (copper, tin) represents 6% of the GDP and Portugal is one of the main exporters of marble. The forests of Portugal provide a large portion of the world's cork supply.
The manufacturing industry is modern and it is made up of small and medium-sized companies. Its main sectors of activity are metallurgy, mechanical engineering, textiles and construction. Moreover, the country has increased its role in the European automobile sector and has a world class mold manufacturing industry.
Services, particularly tourism, play an important role which is rapidly increasing. The tertiary sector contributes to more than 70% of the GDP.
|Breakdown of Economic Activity By Sector||Agriculture||Industry||Services|
|Employment By Sector (in % of Total Employment)||11.5||29.3||59.2|
|Value Added (in % of GDP)||2.3||22.8||74.8|
|Value Added (Annual % Change)||-1.2||-8.7||-0.3|
Source: World Bank - Last Available Data.
|Euro (EUR) - Average Annual Exchange Rate For 1 USD||0.80||0.80||0.73||0.68||0.72|
Source: World Bank
Indicator of Economic Freedom
- Moderately free
- World Rank:
- Regional Rank:
Foreign Trade in Figures
Portugal's economy is open to foreign investment, trade represents more than 70% of the GDP (during the period 2007-2009). Becoming a member of the European Union changed the structure of the Portuguese imports and exports. The country exports more and more technological equipment instead of the traditional agricultural products or products from the textile and clothing industry.
The European Union is Portugal's main customer, followed by the United States. Other commercial partners of Portugal are China, Nigeria and Brazil.
The trade balance of Portugal is structurally in deficit, however its balance experienced an improvement during the crisis, due to the fall of imports which was much higher than the drop on exports. Since the beginning of 2011, Portugal has experienced a decline in its trade deficit over the same period in 2010, thanks to higher exports.
|Foreign Trade Indicators||2006||2007||2008||2009||2010|
|Imports of Goods (million USD)||66,673||78,195||89,975||71,648||75,277|
|Exports of Goods (million USD)||43,332||51,515||55,816||44,310||48,744|
|Imports of Services (million USD)||11,814||13,989||16,262||14,154||14,120|
|Exports of Services (million USD)||18,193||22,978||25,916||22,401||22,856|
|Imports of Goods and Services (Annual % Change)||7.2||5.5||2.8||-10.8||-|
|Exports of Goods and Services (Annual % Change)||9.3||7.4||-||-||-|
|Imports of Goods and Services (in % of GDP)||39.7||40.3||42.6||35.6||-|
|Exports of Goods and Services (in % of GDP)||31.0||32.3||32.5||28.0||-|
|Trade Balance (million USD)||-23,107||-26,450||-33,787||-24,410||-|
|Trade Balance (Including Service) (million USD)||-14,768||-15,240||-21,753||-||-|
|Foreign Trade (in % of GDP)||70.8||72.6||75.1||63.6||-|
Source: WTO - World Trade Organization ; World Bank
Main Partner Countries
(% of Exports)
|Other partnersClose extended list||38.3%|
(% of Imports)
|Other partnersClose extended list||37.0%|
Sources of General Economic Information
Ministry of Agriculture (MADRP)
Ministry of the Economy (ME)
Ministry of Foreign Affairs (MNE)
Business development agency (AICEP)
Ministry of Finance (Inland Revenue)
- Statistical Office
I.N.E. Statistics Portugal
- Central Bank
Banco de Portugal
- Stock Exchange
Bolsa Valores Lisboa/Euronext
- Search Engines
- Economic Portals
Eu sou economista
ISCTE-Inst. Sup. Ciencias Trabalho e Empresa
Portal da empresa
- Executive Power
- The President is the Head of State. He is elected by universal suffrage for a five year term and is the Commander-in-chief of the Army. After a general election, the leader of the majority party or coalition is usually appointed to be Prime Minister by the President, for a four year term. The Prime Minister is the head of the government, and he holds the executive power, which includes implementing laws and overseeing the everyday running of the country. The Council of Ministers is appointed by the President on the recommendation of the Prime Minister. There is also a Council of State, which acts as an advisory body to the President.
- Legislative Power
- Portuguese legislative power is unicameral. The parliament, called the Assembly of the Republic, has 230 seats. The members are elected by universal suffrage for a four year term and the executive branch of government is directly or indirectly dependent on the support of parliament often expressed by a vote of confidence. The Prime Minister cannot dissolve the Assembly, but the President can do so and call for an early election if he so wishes. Portuguese citizens enjoy considerable political rights.
- Main Political Parties
- Political life in Portugal is mainly dominated by two parties: the
PS (Socialist Party) and the
PSD (Social Democratic Party). Other parties active in the country are:
- The PP (Popular Party) – Christian democrats,
- The PCP (Portuguese Communist Party) – left-wing party,
- Bloco de Esquerda (Left-wing block) - Association of parties left of the Communist party
- Current Political Leaders
- President : Anibal CAVACO Silva (since March 2006) - PSD
Prime Minister: Jose SOCRATES (since March 2005) - PS
- Next Election Dates
- Presidential elections: January 2016
Indicator of Freedom of the Press
- World Rank:
- 14 places down compared to 2008
Indicator of Political Freedom
- Political Freedom:
- Civil Liberties:
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In 2011, Portugal’s agriculture, fish and forest product imports from the United States were valued at $401 million, a substantial increase from previous years.
Foreign Agricultural Service on 18 Feb 2013 related to Business Environment in Portugal
As a member of the European Union, Portugal applies EU harmonized regulation on export certificates for plant or animal products whether or not they are intended for human consumption.
Foreign Agricultural Service on 11 Jan 2013 related to Business Environment in Portugal
•All EU member states adopt common external trade policy and measures, which affect their trade relations with other countries.
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2012 Country Commercial Guide for U.S. Companies doing business in Portugal.
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•The EU economy, upset by the lingering uncertainty over sovereign debt crisis and plummeting business and consumer confidence, has moderated in line with the weaker-than-expected global recovery after a good start in the first quarter of 2011. Looking ahead, the high joblessness rate and the gloomy business...
Hong Kong Trade Development Council (HKTDC) on 29 Nov 2011 related to Business Environment in Portugal
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