Portugal Country Guide

Situated on the extremeSouth-Western peak of Europe, Portugal is one of the more popular tourist destinations of Europe.  The country has encountered a constant flow of attention over the centuries, offering a strategic entry point to the European continent.  The Romans, Germanics and Moorish have all held the country at some point in time, each leaving a little of their cultural footprints behind.

Did you know?

1. The first circumnavigation of the globe was led by Portuguese navigator Ferdinand Magellan.
2. The UK’s alliance with Portugal is older than any other and began with a Treaty in 1373
3. Portugal is celebrating the 200th anniversary of the Peninsular Wars, when the French army was expelled with the help of British troops led by the Duke of Wellington
4. The Portuguese language is spoken by over 200 million people throughout the world
5. Portugal celebrated the 100th anniversary of the establishment of the Republican regime in 2010, when the Monarchy was overthrown

Economy in Portugal

For a country with a population of only 10 million, Portugal has a fairly strong economy which is ranked somewhere in the region of 22nd on the world stage.  The willingness of progressive governments to continue a policy of inward investment and development has allowed a capitalist economy to flourish. The changes in economic policies have been driven by government, with its current thrust on exports, private investment and development of the technology sector. In common with other major European countries, Portugal has also undergone a program of privatization – thereby weakening the historical state control of industry.
The economy is dominated by a small number of industries which include, oil refining, automotive, cement production, pulp and paper and textiles – thereby eliminating the countries once dependence on agriculture.  Tourism and fine wines are also a very strong area of growth for the country, with Portugal among one of the largest exporters of wine in the world. Another growth industry is tourism, with many property developments currently underway to address the demand of both the foreign and local tourism industry.
Portugal has recently become one of the leaders in the growing area of alternative power sources, having opened the world’s largest solar power station, with the government committed to investing some $3.8 billion over the next 5 years.  When you consider where Portugal is situated, the country has the potential to further strengthen its position in the renewable energy market.
A recent rise in the rate of unemployment to 7.7% is slightly concerning, although the longer term picture is still fairly upbeat.  Economic growth is currently running at some 1.3% which is an improvement on the 0.5% rate of 2005, further allaying fears of a recession.
Income tax rates for Portuguese nationals are between 10.5% and 40% while corporation tax is set at 27.5%.

Prospects in Portugal

While there have been recent concerns about a possible slowdown on the Portuguese economy, these have been allayed with recent figures showing an increase in the rate of growth.  The progressive attitude of the authorities has benefited the country as a whole, with inward and foreign investment very healthy.
Unemployment has risen of late, although there is always a lag behind an increase in the economy and reduction in unemployment – so this should start to fall fairly soon.  Looking longer term the forward thinking by the authorities may well see Portugal become a major player in the field of renewable energy systems – with a further $3.8 billion already put aside for investment.

Economy

• GDP (2010 est.): €160.3 billion (approx. $208 billion).
• Annual growth rate (2010 est.): 0.3%.
• Per capita GDP (2010 est.): €18,453 (approx. $23,965).
• Avg. inflation rate (2010 est.): 1.2%.
• Services (75.4% gross value added: Wholesale and retail trade; hotels and tourism; restaurants; transport, storage and communication; real estate; banking and finance; repair; government, civil, and public sectors.
• Industry (22.3% gross value added): Textiles, clothing, footwear, wood and cork, paper, chemicals, auto-parts manufacturing, base metals, dairy products, wine and other foods, porcelain and ceramics; glassware, technology; telecommunications.
• Agriculture (2.3% gross value added): Livestock, crops, fish.
• Trade (2009): Exports--€31.3 billion (approx. $42 billion): machinery and tools 16.2%; vehicles and other transport materials 11.8%; base metals 7.7%; clothing 6.8%; plastics and rubber 6.3%; food products 5.9%; minerals and mineral products 5.7%; agricultural products 5.4%; oil products 5.0%; chemical products 4.8%; wood pulp and paper 4.7%; textile materials 4.3%; footwear 4.0%; wood and cork 3.7%; optical and precision instruments 1.1%; skin and leather 0.3%; others 6.3%. Imports--€48.4 billion (approx. $65 billion): machinery and tools 19.1%; oil products 12.7%; vehicles and other transport material 12.2.1%; chemical products 10.3%; agricultural products 9.9%; base metals 7.7%; plastics and rubber 4.9%; food products 4.5%; clothing 3.1%; textile materials 2.7%; wood pulp and paper 2.5%; optical and precision instruments 2.3%; minerals and mineral products 1.6%; wood and cork 1.1%; skins and leather 0.9%; footwear 0.9%; others 3.5%. Export partners--Spain (26.7%); Germany (13.1%); France (12.3%); Angola (7.2%); United Kingdom (5.6%); Italy (3.8%); United States (3.2%); others (28.1%). All EU-27 (74.2%). Import partners--Spain (32.4%); Germany (12.7%); France (8.7%); Italy (5.7%); United Kingdom (5.4%); Netherlands (3.3%); United States (1.6%); others (30.2%). All EU-27 (78%).
• Foreign direct investment (FDI, 2009): Incoming FDI by industry: wholesale and retail 35.9%; real estate, rentals and services to companies 25.3%; manufacturing 22.6%; financial activities 7.2%; transport, warehousing, and communication 3.3%; construction 2.2%; electricity, gas, water 1.3%; other 2.2%. Incoming FDI by country in Euros (total €31.8 billion; approx. $42.9 billion): France 18.4%; United Kingdom 15.6%; Spain 15.2%; Netherlands 15%; Germany 13.7%; Switzerland 4.2%; Luxembourg 3.8%; Canada 2.1%; Italy 2.1%; Belgium 1.8%; Ireland 1.1%; United States 1%; others 6%. Portuguese FDI abroad by country in Euros (total €7.9 billion; approx. $10.6 billion): Netherlands 28.5%; Spain 15.6%; Angola 7%; Brazil 6.8%; Denmark 5.1%; Germany 4%; United States 2.1%; Mozambique 1.8%; others 29.1%.