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The economy of Portugal is ranked 34th in the
World Economic Forum The World Economic Forum (WEF) is an international non-governmental and lobbying organisation based in Cologny, canton of Geneva, Switzerland. It was founded on 24 January 1971 by German engineer and economist Klaus Schwab. The foundation, ...
's
Global Competitiveness Report The ''Global Competitiveness Report'' (GCR) is a yearly report published by the World Economic Forum. Since 2004, the ''Global Competitiveness Report'' ranks countries based on the Global Competitiveness Index, developed by Xavier Sala-i-Martin an ...
for 2019. The great majority of the
international trade International trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of goods or services. (see: World economy) In most countries, such trade represents a significa ...
is done within the
European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are located primarily in Europe, Europe. The union has a total area of ...
(EU), whose countries received 72.8% of the Portuguese exports and were the origin of 76.5% of the Portuguese imports in 2015. Other regional groups that are significant trade partners of
Portugal Portugal, officially the Portuguese Republic ( pt, República Portuguesa, links=yes ), is a country whose mainland is located on the Iberian Peninsula of Southwestern Europe, and whose territory also includes the Atlantic archipelagos of th ...
are the
NAFTA The North American Free Trade Agreement (NAFTA ; es, Tratado de Libre Comercio de América del Norte, TLCAN; french: Accord de libre-échange nord-américain, ALÉNA) was an agreement signed by Canada, Mexico, and the United States that crea ...
(6.3% of the exports and 2% of the imports), the PALOP (5.7% of the exports and 2.5% of the imports), the
Maghreb The Maghreb (; ar, الْمَغْرِب, al-Maghrib, lit=the west), also known as the Arab Maghreb ( ar, المغرب العربي) and Northwest Africa, is the western part of North Africa and the Arab world. The region includes Algeria, ...
(3.7% of the exports and 1.3% of the imports) and the
Mercosul The Southern Common Market, commonly known by Spanish abbreviation Mercosur, and Portuguese Mercosul, is a South American trade bloc established by the Treaty of Asunción in 1991 and Protocol of Ouro Preto in 1994. Its full members are Argentin ...
(1.4% of the exports and 2.5% of the imports). The Portuguese currency is the
euro The euro ( symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union (EU). This group of states is known as the eurozone or, officially, the euro area, and includes about 340 million citizens . ...
(€) and the country has been a part of the
Eurozone The euro area, commonly called eurozone (EZ), is a currency union of 19 member states of the European Union (EU) that have adopted the euro (€) as their primary currency and sole legal tender, and have thus fully implemented EMU pol ...
since its inception.
Portugal Portugal, officially the Portuguese Republic ( pt, República Portuguesa, links=yes ), is a country whose mainland is located on the Iberian Peninsula of Southwestern Europe, and whose territory also includes the Atlantic archipelagos of th ...
's
central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a centra ...
is the ''
Banco de Portugal The Banco de Portugal (English: Bank of Portugal) is the central bank of the Portuguese Republic. The bank was founded by royal charter in 1846, during the reign of Queen Maria II of Portugal, by a merger of the '' Banco de Lisboa'' (Bank of Lis ...
'', which forms part of the
European System of Central Banks The European System of Central Banks (ESCB) is an institution that comprises the European Central Bank (ECB) and the national central banks (NCBs) of all 27 member states of the European Union (EU). Its objective is to ensure price stability ...
, and the major
stock exchange A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for t ...
is the
Euronext Lisbon Euronext Lisbon is a stock exchange in Lisbon, Portugal. It is part of Euronext pan-European exchange. Euronext Lisbon trades equities, public and private bonds, participation bonds, warrants, corporate warrants, investment trust units, and exc ...
, which belongs to the NYSE Euronext, the first global stock exchange. The Portuguese economy has been steady, expanding continuously since the third quarter of 2014, with a yearly GDP growth of 1.5% registered in the second quarter of 2015. The economy's growth has been accompanied by a continuous fall in the unemployment rate (6.3% in the first quarter of 2019, compared with 13.9% registered in the end of 2014). The government budget deficit has also been reduced from 11.2% of GDP in 2010 to 0.5% in 2018. These rates mark an inversion from the negative trends caused by the impact of the
financial crisis of 2007–2008 Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of ...
in the Portuguese economy that made it to shrink for three consecutive years (2011, 2012, and 2013), accompanied by a high increase of the unemployment rate (that achieved a record of 17.7% in early 2013). The crisis has caused a wide range of domestic problems that are specifically related to the levels of public deficit, as well as the excessive debt levels, in the economy. The problems culminated in the confirmation from Portugal to a €78 billion financial bailout from the EU in April 2011, following similar decisions from Greece and the
Republic of Ireland Ireland ( ga, Éire ), also known as the Republic of Ireland (), is a country in north-western Europe consisting of 26 of the 32 counties of the island of Ireland. The capital and largest city is Dublin, on the eastern side of the island. ...
. The government that assumed office in June 2011 had to face tough choices in regard to its attempts to stimulate the economy while at the same time seeking to maintain its public deficit around the EU average. Portugal is home to a number of notable leading companies with worldwide reputations, such as The Navigator Company, a major world player in the international paper market;
Sonae Indústria Sonae Indústria is a manufacturer of engineered wood products, founded and headquartered in Maia, Portugal. Present in five countries within three continents, Sonae Indústria has a wide range of products, from simple board to complete construc ...
, the largest producer of wood-based panels in the world; Corticeira Amorim, the world leader in cork production; Conservas Ramirez, the oldest canned food producer; Cimpor, one of the world's 10th largest producers of cement; EDP Renováveis, the 3rd largest producer of wind energy in the world;
Jerónimo Martins Jerónimo Martins SGPS, SA (JM) is a Portuguese corporate group that operates in food distribution and specialised retail. It operates more than 4,900 stores in Portugal, Poland, and Colombia. The group is the majority owner of Jerónimo Mart ...
, consumer products manufacturer and retail market leader in Portugal, Poland and Colombia; TAP Air Portugal, highly regarded for its safety record, and one of the leading airlines linking Europe with Africa and Latin America (especially Brazil). Education in Portugal has been in gradual modernization and relative expansion since the 1960s, achieving recognition for its world-standard practices and trends in the 21st century. According to the
Programme for International Student Assessment The Programme for International Student Assessment (PISA) is a worldwide study by the Organisation for Economic Co-operation and Development (OECD) in member and non-member nations intended to evaluate educational systems by measuring 15-yea ...
(PISA) 2015, the average Portuguese 15-year-old student, when rated in terms of reading literacy, mathematics and science knowledge, is placed significantly above the
OECD The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate ...
's average. Portugal is home to several world class universities and business schools that have been contributing to the creation of a number of highly renowned international managers and are attracting an increasing number of foreign students. Portugal has the highest emigration rate as a proportion of population in the European Union. More than two million Portuguese people (20% of the population) now live outside the country.


History


Portuguese Colonial Empire

During the
Portuguese Empire The Portuguese Empire ( pt, Império Português), also known as the Portuguese Overseas (''Ultramar Português'') or the Portuguese Colonial Empire (''Império Colonial Português''), was composed of the overseas colonies, factories, and the ...
period, started in the 15th century, until the
Carnation Revolution The Carnation Revolution ( pt, Revolução dos Cravos), also known as the 25 April ( pt, 25 de Abril, links=no), was a military coup by left-leaning military officers that overthrew the authoritarian Estado Novo regime on 25 April 1974 in Lisbo ...
of 1974, the economy of Portugal was centered in trade and
raw material A raw material, also known as a feedstock, unprocessed material, or primary commodity, is a basic material that is used to produce goods, finished goods, energy, or intermediate materials that are feedstock for future finished products. As feeds ...
s related activities within its vast colonial possessions, mainly in Asia (spices, silk,
dye A dye is a colored substance that chemically bonds to the substrate to which it is being applied. This distinguishes dyes from pigments which do not chemically bind to the material they color. Dye is generally applied in an aqueous solution and ...
s,
porcelain Porcelain () is a ceramic material made by heating substances, generally including materials such as kaolinite, in a kiln to temperatures between . The strength and translucence of porcelain, relative to other types of pottery, arises main ...
and gems), Africa (
ivory Ivory is a hard, white material from the tusks (traditionally from elephants) and teeth of animals, that consists mainly of dentine, one of the physical structures of teeth and tusks. The chemical structure of the teeth and tusks of mammals i ...
, timber, oil,
diamonds Diamond is a solid form of the element carbon with its atoms arranged in a crystal structure called diamond cubic. Another solid form of carbon known as graphite is the chemically stable form of carbon at room temperature and pressure, ...
and slaves) and South America (
sugar cane Sugarcane or sugar cane is a species of (often hybrid) tall, perennial grass (in the genus '' Saccharum'', tribe Andropogoneae) that is used for sugar production. The plants are 2–6 m (6–20 ft) tall with stout, jointed, fibrous stalk ...
,
dye A dye is a colored substance that chemically bonds to the substrate to which it is being applied. This distinguishes dyes from pigments which do not chemically bind to the material they color. Dye is generally applied in an aqueous solution and ...
s, woods, and gold). The country, with a transcontinental empire with plenty of natural resources and vast unexploited areas, was among the most powerful nations in the world. In 1822, the Portuguese
colony of Brazil Colonial Brazil ( pt, Brasil Colonial) comprises the period from 1500, with the arrival of the Portuguese, until 1815, when Brazil was elevated to a kingdom in union with Portugal as the United Kingdom of Portugal, Brazil and the Algarves. Duri ...
became an independent country, however, until 1974, Portugal managed to preserve its colonies/overseas territories in Africa, which included
Angola , national_anthem = "Angola Avante"() , image_map = , map_caption = , capital = Luanda , religion = , religion_year = 2020 , religion_ref = , coordinat ...
and
Mozambique Mozambique (), officially the Republic of Mozambique ( pt, Moçambique or , ; ny, Mozambiki; sw, Msumbiji; ts, Muzambhiki), is a country located in southeastern Africa bordered by the Indian Ocean to the east, Tanzania to the north, Malawi ...
, territories that would experience reasonable rates of economic growth until the departure of the Portuguese in 1975. The economy of Portugal and its overseas territories on the eve of the
Carnation Revolution The Carnation Revolution ( pt, Revolução dos Cravos), also known as the 25 April ( pt, 25 de Abril, links=no), was a military coup by left-leaning military officers that overthrew the authoritarian Estado Novo regime on 25 April 1974 in Lisbo ...
(a military coup on 25 April 1974) was growing well above the European average. Average family purchasing power was rising together with new consumption patterns and trends and this was promoting both investment in new
capital equipment A fixed asset, also known as long-lived assets or property, plant and equipment (PP&E), is a term used in accounting for assets and property that may not easily be converted into cash. Fixed assets are different from current assets, such as cash ...
and consumption expenditure for durable and nondurable
consumer goods A final good or consumer good is a final product ready for sale that is used by the consumer to satisfy current wants or needs, unlike a intermediate good, which is used to produce other goods. A microwave oven or a bicycle is a final good, b ...
. The Estado Novo regime economic policy encouraged and created conditions for the formation of large business conglomerates. The regime maintained a policy of
corporatism Corporatism is a collectivist political ideology which advocates the organization of society by corporate groups, such as agricultural, labour, military, business, scientific, or guild associations, on the basis of their common interests. The ...
that resulted in the placement of a large part of the Portuguese economy in the hands of a number of strong
conglomerate Conglomerate or conglomeration may refer to: * Conglomerate (company) * Conglomerate (geology) * Conglomerate (mathematics) In popular culture: * The Conglomerate (American group), a production crew and musical group founded by Busta Rhymes ** ...
s, of which, the most important were known as the "seven magnificent". These Portuguese conglomerates had a business model with similarities to
South Korea South Korea, officially the Republic of Korea (ROK), is a country in East Asia, constituting the southern part of the Korea, Korean Peninsula and sharing a Korean Demilitarized Zone, land border with North Korea. Its western border is formed ...
n
chaebol A chaebol (, ; ) is a large industrial South Korean conglomerate run and controlled by an individual or family. A chaebol often consists of multiple diversified affiliates, controlled by a person or group whose power over the group often exc ...
s and Japanese
keiretsu A is a set of companies with interlocking business relationships and shareholdings. In the legal sense, it is a type of informal business group that are loosely organized alliances within the social world of Japan's business community. The '' ...
s and
zaibatsu is a Japanese term referring to industrial and financial vertically integrated business conglomerates in the Empire of Japan, whose influence and size allowed control over significant parts of the Japanese economy from the Meiji period unt ...
s. Among the seven magnificent were the conglomerates founded and held by the families Champalimaud, Mello ( CUF group), Amorim and Santos (
Jerónimo Martins Jerónimo Martins SGPS, SA (JM) is a Portuguese corporate group that operates in food distribution and specialised retail. It operates more than 4,900 stores in Portugal, Poland, and Colombia. The group is the majority owner of Jerónimo Mart ...
group). The CUF (Companhia União Fabril) group was the largest and most diversified of the Portuguese conglomerates. At one point, it became the largest industrial group in the Iberian Peninsula and one of the five largest in Europe. Its
core business The core business of an organization is an idealized construct intended to express that organization's "main" or "essential" activity. Core business process means that a business's success depends not only on how well each department performs its ...
es included the cement,
chemicals A chemical substance is a form of matter having constant chemical composition and characteristic properties. Some references add that chemical substance cannot be separated into its constituent elements by physical separation methods, i.e., wit ...
,
petrochemicals Petrochemicals (sometimes abbreviated as petchems) are the chemical products obtained from petroleum by refining. Some chemical compounds made from petroleum are also obtained from other fossil fuels, such as coal or natural gas, or renewable so ...
, agrochemicals, textiles, beer, beverages,
metallurgy Metallurgy is a domain of materials science and engineering that studies the physical and chemical behavior of metallic elements, their inter-metallic compounds, and their mixtures, which are known as alloys. Metallurgy encompasses both the sc ...
,
naval engineering Naval architecture, or naval engineering, is an engineering discipline incorporating elements of mechanical, electrical, electronic, software and safety engineering as applied to the engineering design process, shipbuilding, maintenance, an ...
,
electrical engineering Electrical engineering is an engineering discipline concerned with the study, design, and application of equipment, devices, and systems which use electricity, electronics, and electromagnetism. It emerged as an identifiable occupation in the l ...
, insurance, banking, paper, tourism and mining. Its main business activities and corporate headquarters located in
mainland Portugal Continental Portugal ( pt, Portugal continental, ) or mainland Portugal comprises the bulk of the Portuguese Republic, namely that part on the Iberian Peninsula and so in Continental Europe, having approximately 95% of the total population and 9 ...
, but it also included branches, plants and several developing business projects all around the Portuguese overseas territories, especially in
Angola , national_anthem = "Angola Avante"() , image_map = , map_caption = , capital = Luanda , religion = , religion_year = 2020 , religion_ref = , coordinat ...
and
Mozambique Mozambique (), officially the Republic of Mozambique ( pt, Moçambique or , ; ny, Mozambiki; sw, Msumbiji; ts, Muzambhiki), is a country located in southeastern Africa bordered by the Indian Ocean to the east, Tanzania to the north, Malawi ...
. Other medium-sized family companies specialized in textiles (for instance those located in the city of
Covilhã Covilhã () is a city and a municipality in the Centro region, Portugal. The city proper had 34,772 inhabitants in 2001. The municipality population in 2011 was 51,797, in an area of . It is located in the Beiras e Serra da Estrela subregion and ...
and the northwest), ceramics, porcelain, glass and crystal (like those of Alcobaça,
Caldas da Rainha Caldas da Rainha () is a medium-sized Portuguese city in the Oeste region, in the historical province of Estremadura, and in the district of Leiria. The city serves as the seat of the larger municipality of the same name and of the Comunidad ...
and
Marinha Grande Marinha Grande () is a municipality in the Leiria District, Portugal. The population in 2021 was 39,032, in an area of 187.25 km². The city itself has a population of 32,330. It is located right in the middle of the 700-year-old Leiria pine ...
), engineered wood (like
SONAE Sonae is a multinational business group based in Maia, Porto District, Portugal. It is present in 90 countries, operating in several sectors, including retail, financial services, shopping centres management, software and information systems, ...
near
Porto Porto or Oporto () is the second-largest city in Portugal, the capital of the Porto District, and one of the Iberian Peninsula's major urban areas. Porto city proper, which is the entire municipality of Porto, is small compared to its metropo ...
), canned fish (like those of
Algarve The Algarve (, , ; from ) is the southernmost NUTS II region of continental Portugal. It has an area of with 467,495 permanent inhabitants and incorporates 16 municipalities ( ''concelhos'' or ''municípios'' in Portuguese). The region has it ...
and the northwest which included one of the oldest canned fish companies in continuous operation in the world), fishing, food and beverage producing, tourism (well established in
Estoril Estoril () is a town in the Municipality of Cascais, Portugal, on the Portuguese Riviera. It is a tourist destination, with luxury hotels, beaches, and the Casino Estoril. It has been home to numerous royal families and celebrities, and has h ...
/
Cascais Cascais () is a town and municipality in the Lisbon District of Portugal, located on the Portuguese Riviera. The municipality has a total of 214,158 inhabitants in an area of 97.40 km2. Cascais is an important tourist destination. Its marin ...
/
Sintra Sintra (, ) is a town and municipality in the Greater Lisbon region of Portugal, located on the Portuguese Riviera. The population of the municipality in 2011 was 377,835, in an area of . Sintra is one of the most urbanized and densely populate ...
(the
Portuguese Riviera The Portuguese Riviera ( Portuguese: ''Riviera Portuguesa'') is a term used in the tourist industry for the affluent coastal region to the west of Lisbon, Portugal, centered on the coastal municipalities of Cascais (including Estoril), Oeiras ...
) and growing as an international attraction in the
Algarve The Algarve (, , ; from ) is the southernmost NUTS II region of continental Portugal. It has an area of with 467,495 permanent inhabitants and incorporates 16 municipalities ( ''concelhos'' or ''municípios'' in Portuguese). The region has it ...
since the 1960s) and in agriculture (like the ones scattered around Ribatejo and
Alentejo Alentejo ( , ) is a geographical, historical, and cultural region of south–central and southern Portugal. In Portuguese, its name means "beyond () the Tagus river" (''Tejo''). Alentejo includes the regions of Alto Alentejo and Baixo Alent ...
 – known as the breadbasket of Portugal) completed the panorama of the national economy by the early 1970s. In addition, rural areas' populations were committed to
agrarianism Agrarianism is a political and social philosophy that has promoted subsistence agriculture, smallholdings, and egalitarianism, with agrarian political parties normally supporting the rights and sustainability of small farmers and poor peasants ag ...
that was of great importance for a majority of the total population, with many families living exclusively from agriculture or complementing their salaries with farming, husbandry and forestry yields. Besides that, the overseas territories were also displaying impressive economic growth and development rates from the 1920s onwards. Even during the
Portuguese Colonial War The Portuguese Colonial War ( pt, Guerra Colonial Portuguesa), also known in Portugal as the Overseas War () or in the former colonies as the War of Liberation (), and also known as the Angolan, Guinea-Bissau and Mozambican War of Independence, ...
(1961–1974), a
counterinsurgency Counterinsurgency (COIN) is "the totality of actions aimed at defeating irregular forces". The Oxford English Dictionary defines counterinsurgency as any "military or political action taken against the activities of guerrillas or revolutionari ...
war against independentist guerrilla and terrorism, the overseas territories of
Angola , national_anthem = "Angola Avante"() , image_map = , map_caption = , capital = Luanda , religion = , religion_year = 2020 , religion_ref = , coordinat ...
and
Mozambique Mozambique (), officially the Republic of Mozambique ( pt, Moçambique or , ; ny, Mozambiki; sw, Msumbiji; ts, Muzambhiki), is a country located in southeastern Africa bordered by the Indian Ocean to the east, Tanzania to the north, Malawi ...
(Portuguese Overseas Provinces at the time) had continuous economic growth rates and several sectors of its local economies were booming. They were internationally notable centres of production of oil, coffee, cotton, cashew, coconut, timber, minerals (like diamonds), metals (like iron and aluminium), banana, citrus, tea, sisal, beer, cement, fish and other sea products, beef and textiles. Labour unions were not allowed and a
minimum wage A minimum wage is the lowest remuneration that employers can legally pay their employees—the price floor below which employees may not sell their labor. Most countries had introduced minimum wage legislation by the end of the 20th century. B ...
policy was not enforced. However, in a context of an expanding economy, bringing better living conditions for the Portuguese population in the 1960s, the outbreak of the colonial wars in Africa set off significant social changes, among them the rapid incorporation of more and more women into the labour market. Marcelo Caetano moved on to foster economic growth and some social improvements, such as the awarding of a monthly pension to rural workers who had never had the chance to pay social security. The objectives of Caetano's pension reform were threefold: enhancing equity, reducing fiscal and actuarial imbalance, and achieving more efficiency for the economy as a whole, for example, by establishing contributions less distortive to labour markets or by allowing the savings generated by pension funds to increase the investments in the economy.


1974

The post
Carnation Revolution The Carnation Revolution ( pt, Revolução dos Cravos), also known as the 25 April ( pt, 25 de Abril, links=no), was a military coup by left-leaning military officers that overthrew the authoritarian Estado Novo regime on 25 April 1974 in Lisbo ...
period was characterized by chaos and negative economic growth as industries were nationalised and the negative effects of the decoupling of Portugal from its former colonies were felt. Heavy industry came to an abrupt halt. All sectors of the economy from manufacturing, mining, chemical, defence, finance, agriculture and fishing went into free fall. Portugal found itself overnight going from the country in Western Europe with the highest growth rate to the lowest – in fact it experienced several years of negative growth. This was amplified by the mass emigration of skilled workers and entrepreneurs due to political intimidation, and the costs of accommodating in Portugal thousands of refugees from the former overseas provinces in Africa – the '' retornados''. After the
Carnation Revolution The Carnation Revolution ( pt, Revolução dos Cravos), also known as the 25 April ( pt, 25 de Abril, links=no), was a military coup by left-leaning military officers that overthrew the authoritarian Estado Novo regime on 25 April 1974 in Lisbo ...
's turmoil of 1974, the Portuguese economic basis changed deeply. The Portuguese economy had changed significantly by 1973 prior to the leftist military coup, compared with its position in 1961 – total output (GDP at factor cost) had grown by 120 percent in real terms. Clearly, the prerevolutionary period was characterized by robust annual growth rates for GDP (6.9 percent), industrial production (9 percent), private consumption (6.5 percent), and
gross fixed capital formation Gross fixed capital formation (GFCF) is a macroeconomic concept used in official national accounts such as the United Nations System of National Accounts (UNSNA), National Income and Product Accounts (NIPA) and the European System of Accounts (ES ...
(7.8 percent). After the Carnation Revolution military coup of 1974, by abandoning its moderate-reformist, pro-democracy posture, the
Movimento das Forças Armadas ''Movimento'' (English: "Movement") is the sixth studio album by Portuguese group Madredeus. It was released on 9 April 2001 by EMI-Valentim de Carvalho. Recording ''Movimento'' was recorded in January and February 2000 at the Wisseloord Studio ...
leadership set out on a course of sweeping nationalizations and land expropriations during a period known as '' PREC''. Wide powers were handed over to the
working class The working class (or labouring class) comprises those engaged in manual-labour occupations or industrial work, who are remunerated via waged or salaried contracts. Working-class occupations (see also " Designation of workers by collar colou ...
always having the concept of
dictatorship of the proletariat In Marxist philosophy, the dictatorship of the proletariat is a condition in which the proletariat holds state power. The dictatorship of the proletariat is the intermediate stage between a capitalist economy and a communist economy, whereby the ...
in mind. The lasting effects of this hampered Portugal's economic growth and development for years to come. In 1931, at the initiation of Salazar's more outward-looking economic policy due to the influence of a new generation of technocrats with background in economics and technical-industrial know-how, Portugal's per capita GDP was only 38 percent of the EC-12 average; by the end of the Salazar period, in 1968, it had risen to 48 percent; and in 1973, on the eve of the revolution, Portugal's per capita GDP had reached 56.4 percent of the EC-12 average. In 1975, the year of maximum revolutionary turmoil, Portugal's per capita GDP declined to 52.3 percent of the EC-12 average. Convergence of real GDP growth toward the EC average occurred as a result of Portugal's economic resurgence since 1985. In 1991 Portugal's GDP per capita climbed to 54.9 percent of the EC average, exceeding by a fraction the level attained just during the worst revolutionary period. Portugal overtook Greece in terms of GDP per capita in 1992, but fell again below it in 1993. This situation endured until 2013 when Greece was more hardly hit by economic fallout from debt crisis. The growth rate of Portuguese merchandise exports during the period 1959 to 1973 was notable – 11 percent per annum. In 1960 the bulk of exports was accounted for by a few products – canned fish, raw and manufactured cork, cotton textiles, and wine. By contrast, in the early 1970s (before the 1974 military coup), Portugal's export list reflected significant product diversification, including both consumer and capital goods. Several branches of Portuguese industry became export-oriented, and in 1973 over one-fifth of Portuguese manufactured output was exported. There was a 16-percentage-point increase in the participation of the services sector from 39 percent of GDP in 1973 to 55.5 percent in 1990. Most of this growth reflected the exacerbated proliferation of civil service employment and the associated cost of
public administration Public Administration (a form of governance) or Public Policy and Administration (an academic discipline) is the implementation of public policy, administration of government establishment ( public governance), management of non-profit es ...
, together with the contribution of tourism services during the 1980s to the detriment of more sustainable and reproductive activities like manufacturing, exporting and technology/capital-intensive industries.


EU membership (1986)

Membership in the
European Communities The European Communities (EC) were three international organizations that were governed by the same set of institutions. These were the European Coal and Steel Community (ECSC), the European Atomic Energy Community (EAEC or Euratom), and the ...
, achieved in 1986, contributed to stable economic growth and development, largely through increased trade ties and an inflow of
funds Funding is the act of providing resources to finance a need, program, or project. While this is usually in the form of money, it can also take the form of effort or time from an organization or company. Generally, this word is used when a firm use ...
allocated by the
European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are located primarily in Europe, Europe. The union has a total area of ...
(and before that the European Communities) to improve the country's infrastructure. Although the occurrence of economic growth and a public debt relatively well-contained as a result of the number of civil servants has been increased from 485,368 in 1988 to 509,732 in 1991, which was a much lower increase than that which will happen in the following years until 2005 marked by irrational and unsustainable State employment, from 1988 to 1993, during the government cabinets led by then Prime Minister
Aníbal Cavaco Silva Aníbal António Cavaco Silva, Order of Christ (Portugal), GCC, Order of Liberty, GColL, Order of Prince Henry, GColIH (; born 15 July 1939) is a Portuguese economist who served as the 19th president of Portugal, in office from 9 March 2006 to 9 ...
, the Portuguese economy was radically changed. As a result, there was a sharp and rapid decrease in the output of tradable goods and a rise of the importance of the non-tradable goods sector in the Portuguese economy. After a
recession In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various ...
in 1993, the economy grew at an average annual rate of 3.3%, well above EU averages but well behind the growth of the Portuguese economy before the military coup of 1974. In order to qualify for the Economic and Monetary Union (EMU), Portugal agreed to cut its fiscal deficit and undertake structural reforms. The EMU brought to Portugal exchange rate stability, falling inflation, and falling interest rates. Falling interest rates, in turn, lowered the cost of public debt and helped the country achieve its fiscal targets. In 1999, it continued to enjoy sturdy economic growth, falling
interest In finance and economics, interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distin ...
rates, and low unemployment. The country qualified for the
Economic and Monetary Union of the European Union The economic and monetary union (EMU) of the European Union is a group of policies aimed at converging the economies of member states of the European Union at three stages. There are three stages of the EMU, each of which consists of prog ...
(EMU) in 1998 and joined with 10 other European countries in launching the
euro The euro ( symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union (EU). This group of states is known as the eurozone or, officially, the euro area, and includes about 340 million citizens . ...
on 1 January 1999. The three different designs chosen for the national side of the Portuguese euro coins were drawn by the artist Vitor Manuel Fernandes dos Santos. The inspiration came from the three seals of the first king,
Dom Afonso Henriques Afonso I of PortugalOr also ''Affonso'' (Archaic Portuguese-Galician) or ''Alphonso'' (Portuguese-Galician) or ''Alphonsus'' ( Latin version), sometimes rendered in English as ''Alphonzo'' or ''Alphonse'', depending on the Spanish or French in ...
. Portugal's inflation rate for 1999, 2.4%, was comfortably low. Household debt expanded rapidly. The
European Commission The European Commission (EC) is the executive of the European Union (EU). It operates as a cabinet government, with 27 members of the Commission (informally known as "Commissioners") headed by a President. It includes an administrative body ...
,
OECD The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate ...
, and others advised the Portuguese Government to exercise more fiscal restraint. Portugal's public deficit exceeded 3% of GNP in 2001, the EU's self-imposed limit, and left the country open to either EU sanctions or tighter financial supervision. The overall rate of growth slowed in late 2001 and into 2002, making fiscal austerity that much more painful to implement. Portugal made significant progress in raising its standard of living to that of its EU partners. GDP per capita on a purchasing power parity basis rose from 51% of the EU average in 1985 to 78% in early 2002. By 2005 this had dropped to 72% (of the average across all of now 25 EU members, including seven with GDP per capita lower than Portugal) as GDP per capita rose in other EU countries. Unemployment stood at 4.1% at the end of 2001, which was low compared to the EU average. GDP growth in 2006, at 1.3%, was the lowest not just in the European Union but in all of Europe. In the 2000s, the Czech Republic, Malta and Slovenia overtook Portugal in terms of GDP per capita. From 2010 until 2012, GDP per capita (PPP) in Portugal fell below those of Slovakia (in Europe) and Seychelles (outside Europe). In 2013 it was estimated that the Portuguese GDP per capita will be similar (within minus or plus US$1,000 per capita) of those of Greece, Estonia and Lithuania. The GDP per capita fell from just over 80% of the EU 25 average in 1999 to just over 70% in 2007. This poor performance of the Portuguese economy was explored in April 2007 by
The Economist ''The Economist'' is a British weekly newspaper printed in demitab format and published digitally. It focuses on current affairs, international business, politics, technology, and culture. Based in London, the newspaper is owned by The Eco ...
which described
Portugal Portugal, officially the Portuguese Republic ( pt, República Portuguesa, links=yes ), is a country whose mainland is located on the Iberian Peninsula of Southwestern Europe, and whose territory also includes the Atlantic archipelagos of th ...
as "a new
sick man of Europe "Sick man of Europe" is a label given to a nation which is located in some part of Europe and experiencing a time of economic difficulty or impoverishment. Emperor Nicholas I of the Russian Empire is considered to be the first to use the term ...
"."A new sick man of Europe"
The Economist ''The Economist'' is a British weekly newspaper printed in demitab format and published digitally. It focuses on current affairs, international business, politics, technology, and culture. Based in London, the newspaper is owned by The Eco ...
, 2007-04-14.
From 2002 to 2007, the unemployment rate increased 65% (270,500 unemployed citizens in 2002, 448,600 unemployed citizens in 2007). In December 2009, ratings agency
Standard and Poor's S&P Global Ratings (previously Standard & Poor's and informally known as S&P) is an American credit rating agency (CRA) and a division of S&P Global that publishes financial research and analysis on stocks, bonds, and commodities. S&P is cons ...
lowered its long-term credit assessment of Portugal to "negative" from "stable", voicing pessimism on the country's structural weaknesses in the economy and weak competitiveness that would hamper growth and the capacity to strengthen its public finances and reduce
debt Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase. The ...
. However, the Portuguese subsidiaries of large
multinational companies A multinational company (MNC), also referred to as a multinational enterprise (MNE), a transnational enterprise (TNE), a transnational corporation (TNC), an international corporation or a stateless corporation with subtle but contrasting senses, i ...
ranked among the most
productive Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an aggregate output to a single input or an aggregate input used in a production proces ...
in the world, including Siemens Portugal, Volkswagen Autoeuropa, Qimonda Portugal (before the parent company filed for bankruptcy),
IKEA IKEA (; ) is a Dutch multinational conglomerate based in the Netherlands that designs and sells , kitchen appliances, decoration, home accessories, and various other goods and home services. Started in 1943 by Ingvar Kamprad, IKEA has been ...
, Nestlé Portugal, Microsoft Portugal,
Unilever Unilever plc is a British multinational consumer goods company with headquarters in London, England. Unilever products include food, condiments, bottled water, baby food, soft drink, ice cream, instant coffee, cleaning agents, energy dri ...
/
Jerónimo Martins Jerónimo Martins SGPS, SA (JM) is a Portuguese corporate group that operates in food distribution and specialised retail. It operates more than 4,900 stores in Portugal, Poland, and Colombia. The group is the majority owner of Jerónimo Mart ...
and Danone Portugal. Many Portuguese companies have grown and expanded internationally since after 1986. Among the most notable Portugal-based global companies are
SONAE Sonae is a multinational business group based in Maia, Porto District, Portugal. It is present in 90 countries, operating in several sectors, including retail, financial services, shopping centres management, software and information systems, ...
, Amorim, Sogrape, EFACEC, Portugal Telecom,
Jerónimo Martins Jerónimo Martins SGPS, SA (JM) is a Portuguese corporate group that operates in food distribution and specialised retail. It operates more than 4,900 stores in Portugal, Poland, and Colombia. The group is the majority owner of Jerónimo Mart ...
, Cimpor, Unicer, Millennium bcp, Lactogal, Sumol + Compal,
Delta Cafés Delta Cafés () is a Portuguese coffee roasting and coffee packaging company headquartered in Campo Maior, Alentejo. The company was founded in 1961 and is among the top market leaders in the Iberian Peninsula. The company belongs to Rui Nabei ...
, Derovo, Critical Software, Galp Energia, EDP, Grupo José de Mello, Sovena Group, Valouro, Renova, Teixeira Duarte,
Soares da Costa Soares da Costa SGPS, S.A. (, ''Sociedade de Construções Soares da Costa S.A.'') is a Portuguese company. Its main activities are civil engineering and construction, public works, real estate, housing construction, production of construction ma ...
, Portucel Soporcel, Simoldes, Iberomoldes, Logoplaste and TAP Portugal


Portuguese financial crisis (2010–2013)

The Portuguese Financial crisis was a major political and
economic crisis An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with th ...
, related with the European sovereign debt crisis and its heavy impact in Portugal. The crisis started to be noted in the initial weeks of 2010 and only began to fade away with the start of the Portuguese economic recovery in the late 2013. It was the Portuguese economy's most severe recession since the 1970s. A report published in January 2011 by the ''
Diário de Notícias ''Diário de Notícias'' () is a Portuguese daily newspaper published in Lisbon, Portugal. Established since 1864, the paper is considered a newspaper of record for Portugal. History and profile ''Diário de Notícias'' was first published in ...
'', a leading Portuguese newspaper, demonstrated that during the period of the
Carnation Revolution The Carnation Revolution ( pt, Revolução dos Cravos), also known as the 25 April ( pt, 25 de Abril, links=no), was a military coup by left-leaning military officers that overthrew the authoritarian Estado Novo regime on 25 April 1974 in Lisbo ...
, from 1974 to 2010, the Portuguese democratic
government A government is the system or group of people governing an organized community, generally a state. In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government i ...
s have encouraged over-expenditure and investment bubbles through unclear public-private partnerships. Consequently, numerous ineffective external consultancy/advising committees and firms were funded, and this facilitated considerable slippage in state-managed
public works Public works are a broad category of infrastructure projects, financed and constructed by the government, for recreational, employment, and health and safety uses in the greater community. They include public buildings ( municipal buildings, sc ...
, inflated top management and head officers' bonuses and wages. Additionally, a recruitment policy eventuated that has boosted the number of redundant public servants.Grande investigação DN Conheça o verdadeiro peso do Estado
Diário de Notícias ''Diário de Notícias'' () is a Portuguese daily newspaper published in Lisbon, Portugal. Established since 1864, the paper is considered a newspaper of record for Portugal. History and profile ''Diário de Notícias'' was first published in ...
(7 January 2011)
For almost four decades, the nation's economy has also been damaged by risky
credit Credit (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt) ...
, public debt creation, and mismanaged European
structural and cohesion funds The European Structural and Investment Funds (ESI Funds, ESIFs) are financial tools governed by a common rulebook, set up to implement the regional policy of the European Union, as well as the structural policy pillars of the Common Agricultura ...
. Apparently, Prime Minister
Sócrates Sócrates Brasileiro Sampaio de Souza Vieira de Oliveira (19 February 1954 – 4 December 2011), simply known as Sócrates, was a Brazilian footballer who played as a midfielder. His medical degree and his political awareness, combined with st ...
's cabinet was unable to forecast or prevent the crisis when symptoms first appeared in 2005, and was later incapable of doing anything to ameliorate the situation when the country was on the verge of bankruptcy in 2011. In 2010, acronyms were widely used by international bond analysts, academics, and the international financial press when referring to the underperforming economies of Portugal, Italy, Ireland, Greece and Spain. Four factors that heavily contributed to the financial crisis were: * The financial collapse of
Banco Português de Negócios Banco Português de Negócios (English: Portuguese Bank of Business), or simply BPN, was a Portuguese banking institution. It used to be a private bank, but was nationalized by the Portuguese Government in 2008 after a bad management and malpractice ...
(BPN) due to a huge amount of toxic credits conceded by the bank in exchange of promises of illegal gains to the administrators, like corporate positions or the acquisitions of assets previously detained by them. The government nationalized the bank in November 2008 and, according to the BPN Inquiry Commission, until 2012, the nationalization of the bank cost 3405 million Euros to the State. In 2010 alone, the bank had an impact of 1803 million Euros in the public accounts, which was equivalent to 1.2% of the GDP. * The bankruptcy of the bank "Banco Privado Português" (BPP), which entailed large costs for the State. This bank was dissolved by
Banco de Portugal The Banco de Portugal (English: Bank of Portugal) is the central bank of the Portuguese Republic. The bank was founded by royal charter in 1846, during the reign of Queen Maria II of Portugal, by a merger of the '' Banco de Lisboa'' (Bank of Lis ...
in April 2010. In 2010 alone, the BPP cost 450 million euros to the taxpayers, consisting in guarantees driven by the State in that year. * The budgetary slippage with the
Public–private partnership A public–private partnership (PPP, 3P, or P3) is a long-term arrangement between a government and private sector institutions.Hodge, G. A and Greve, C. (2007), Public–Private Partnerships: An International Performance Review, Public Adminis ...
s (PPPs): between 2008 and 2010 the accounts slipped 560.2 million euros, mainly due to the rents paid to road concessions, to which were paid more 425.5 million euros than it was budgeted. In 2011 the slippage in the rents with the road concessions rose 28% to 197.4 million euros above what was budgeted and rose 42.3% to 266.3 million euros above what had been forecasted for 2010. The State spent a total of 896.6 million euros in rents to the road concessions. The rents paid to the PPPs in the health and rail sectors also slipped considerably. * The Swaps contracted by State-owned businesses with potential losses higher than 3000 million euros. In 2013, the Portuguese government reserved 898 million euros in the Amending Government Budget to bear the costs of the settlement of these contracts, so those companies can pay the accumulated losses to the financial institutions with which they contracted those swaps. The recipient firms of that support are the
Lisbon Metro The Lisbon Metro ( pt, Metropolitano de Lisboa) is the rapid transit system in Lisbon, Portugal. Opened in December 1959, it was the first metro system in Portugal. , the system's four lines total of route and serve 56 stations. History ...
(548 million euros), the Porto Metro (315 million euros),
REFER Refer or referral may refer to: * Reference, a relation of designation or linking between objects **Word-sense disambiguation, when a single term may refer to multiple meanings * Referral marketing, to personally recommend, endorse, and pass a per ...
, whose administrator in the time when those contracts were approved is the former Finance Minister of Portugal, Maria Luís Albuquerque (20 million euros) and Estradas de Portugal (15 million euros). In April 2011, Portugal confirmed the receipt of a financial bailout from the IMF and the European Union worth €78 billion ($115 billion, £70 billion), following Greece and the Republic of Ireland. Some senior German policymakers publicly stated that emergency bailouts for Greece and future EU aid recipients should be accompanied by harsh penalties, which caused social unrest in Ireland and across Southern European countries, germanophobia, a big increase of euroscepticism and the rise of far-left and far-right parties in Greece (namely
SYRIZA The Coalition of the Radical Left – Progressive Alliance ( el, Συνασπισμός Ριζοσπαστικής Αριστεράς – Προοδευτική Συμμαχία, Synaspismós Rizospastikís Aristerás – Proodeftikí Simachía), ...
,
Golden Dawn Golden Dawn or The Golden Dawn may refer to: Organizations * Hermetic Order of the Golden Dawn, a nineteenth century magical order based in Britain ** The Hermetic Order of the Golden Dawn, Inc., a modern revival founded in 1977 ** Open Source ...
, among others), as well as the eurosceptic
Five Star Movement The Five Star Movement ( it, Movimento 5 Stelle , M5S) is a political party in Italy. Its leader and president is Giuseppe Conte, Prime Minister of Italy from 2018 until 2021. The M5S was founded on 4 October 2009 by Beppe Grillo, a comedian an ...
and
Lega Nord Lega Nord (; acronym: LN), whose complete name is (), is a right-wing, federalist, populist and conservative political party in Italy. In the run-up of the 2018 general election, the party was rebranded as (), without changing its offici ...
in Italy. In May 2007, 65% of the Portuguese tended to trust the EU institutions while 24% tended not to trust them. On the other hand, in November 2012, only 34% tended to trust them, while 59% tended not to trust them (even so, less extreme than Greece or Spain, where 81% and 72% tended not to trust them, respectively). Partly as a result of this disappointed attitude concerning the EU, Portugal has started to close ties with Africa, Brazil as well as with other Latin American countries, China, USA, Switzerland and other parts of the world, which has been reflected both in the investments, in foreign trade, and even in emigration. The three-year EU aid program incorporating the €78 billion support package ended in May 2014. At the time the Portuguese government reaffirmed its commitment to continue its economic reform, declaring that while the bailout had allowed the country to put its economy back on track, it still faced significant challenges.


Resumption of Portuguese economic growth (2014–present)

The year of 2014 marked the start of the recovery of the Portuguese economy. Since the third quarter of 2014, the Portuguese economy has been steadily expanding, with a GDP growth of 0.4% quarterly and 1.5% yearly registered in the second quarter of 2015. The economic recovery has been accompanied by a continuous fall in the unemployment rate (8.5% in the third quarter of 2017, from a high of 17% in 2012). The Government budget deficit has also been reduced from the 11.2% of GDP in 2010 to 4.8% in 2014. The
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glo ...
issued an update report in late June 2017 with some positive news including a stronger near-term outlook and an increase in investments and exports. Because of a surplus in 2016, the country was no longer bound by the Excessive Deficit Procedure. The banking system was more stable, although there were still non-performing loans and corporate debt. The IMF recommended working on solving these problems for Portugal to be able to attract more private investment. "Sustained strong growth, together with continued public debt reduction, would reduce vulnerabilities arising from high indebtedness, particularly when monetary accommodation is reduced."


Data

GDP growth % GDP per capita (in US$ PPP) The following table shows the main economic indicators in 1980–2021 (with IMF staff estimates in 2022–2027). Inflation below 5% is in green.


Government sector


Government expenditure by function

According to Eurostat in 2011, the General Government expenditure by main function, as a percentage of Total Expenditure, was as follows (compared to the Eurozone and EU averages): Also according to Eurostat in 2011, the General Government expenditure by three of the main functions, as a percentage of GDP, was as follows (compared to the Eurozone and EU averages): According to these data, in 2011, Portugal did not present any overspending neither on the coverage of social risks (social protection and health) and the slightly high spending on education can be related to a lag between the average qualifications of Portuguese and their European counterparts, resulting in an eventual attempt to overcome that lag. There has been some remarkable progress towards that objective, since the school dropout rate fell from 43.6% in 2000 to 23.2% in 2011, being this still the 3rd highest in the EU, where the average was 13.5% in the same year. The functions where the overspending probably existed were in "general public services", specifically those related with compensations to employees, intermediate and final consumptions of the "legislative and executive organs, financial and fiscal affairs and external affairs", some sub-functions in the item "economic affairs", since there was a very intensive public works, notably focused on new motorways, that didn't have a high multiplier effect. It is also worthy to mention the item "public order and safety" and "defence", with the compensations to employees and intermediate and final consumptions being quite higher than the EU average. There seems to have been an overspending on these functions, since Portugal has had only a very discrete role in international conflicts and the crime rate is also quite moderate. There was a big controversy about the purchase of two submarines, whose need has been questioned. Also the expenses in the sub-section of "outpatient services", belonging to the "health" function" was very high compared to the EU average, in opposition to the in-patient "hospital services" where the expenses were very low in 2011. It is also very relevant to explain the difficulties in controlling the deficits if we take into account the payments of interests concerning to loans contracted by the State. Having been stable around 3.0% of the GDP until 2010, they jumped to 4.2% in 2011.


Evolution of the number of public employees in Portugal (1968–2022)

All data refer to 31 December of the respective year, except 1996 (which refer to 1 October).
Data for 1986, 1988 and 1991 were obtained by estimates from internal surveys and exclude military and militarized personnel and public employees in the
Azores ) , motto =( en, "Rather die free than subjected in peace") , anthem= ( en, "Anthem of the Azores") , image_map=Locator_map_of_Azores_in_EU.svg , map_alt=Location of the Azores within the European Union , map_caption=Location of the Azores wi ...
and
Madeira ) , anthem = ( en, "Anthem of the Autonomous Region of Madeira") , song_type = Regional anthem , image_map=EU-Portugal_with_Madeira_circled.svg , map_alt=Location of Madeira , map_caption=Location of Madeira , subdivision_type=Sovereign st ...
islands.
Data for 2010 is an estimate made in October 2010 for the State Budget 2011. In 2019, 13.7% of the employment as a percentage of the labour force worked in the General Government, as opposed to an average of 17.9% in the OECD.


Employment and wages

In the first quarter of 2022, the unemployment rate was at 5.9%. The unemployment rate has been continuously falling since the end of 2013, marking the reversal of the increase of unemployed people trend that had been recorded since the 2000s. This negative trend had been pronounced with the impact of the
financial crisis of 2007–2008 Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of ...
, causing the unemployment rate to climb, achieving a record of 17.7% in the early 2013. The decrease of the unemployment is related with the expanding of the Portuguese Economy registered since the third quarter of 2014 (after shrinking in 2011, 2012 and 2013), with a yearly GDP growth of 1.5% registered in the second quarter of 2015. The increase of the number of people that emigrated to work in other countries also impacted positively the reduction of the unemployment, this happening specially in 2013, when the labor force decreased 1.6% in the first 9 months of the year. Other factors have also impacted the decrease, like the methodology used by the Statistics Portugal (for instance, people doing internships or professional training do not count as unemployed), the previous heavy loss of jobs, the increase of tourism and the resurgence of the agricultural sector, where many jobs were created. Although being both a
developed country A developed country (or industrialized country, high-income country, more economically developed country (MEDC), advanced country) is a sovereign state that has a high quality of life, developed economy and advanced technological infrastruct ...
and a high income country, Portugal has the lowest
GDP per capita Lists of countries by GDP per capita list the countries in the world by their gross domestic product (GDP) per capita. The lists may be based on nominal or purchasing power parity GDP. Gross national income (GNI) per capita accounts for inflo ...
in Western Europe and according to the
Eurostat Eurostat ('European Statistical Office'; DG ESTAT) is a Directorate-General of the European Commission located in the Kirchberg, Luxembourg, Kirchberg quarter of Luxembourg City, Luxembourg. Eurostat's main responsibilities are to provide stati ...
it had the 9th lowest
purchasing power Purchasing power is the amount of goods and services that can be purchased with a unit of currency. For example, if one had taken one unit of currency to a store in the 1950s, it would have been possible to buy a greater number of items than would ...
among the 27 member states of the European Union in 2018. Maria da Conceição Cerdeira, one of the authors of a published research study made by the Lisbon School of Economics and Management (ISEG), explained that "in a generic way, there is not a high intensity of work, or a great psychological pressure" in Portugal, for the mass of common ordinary workers, unlike what happens in Northern Europe or North America. Less pressure does not mean, however, a better job. The last European survey of workers, published in 2007 and which formed the basis of this 2009 research study showed that Portugal is the 5th European country with lower quality of work. A study conducted by Harvard Business School, including 9 EU member-countries, also revealed that Portugal had the 2nd worst managers in that universe, just above Greece, and below Ireland, Poland, Italy, UK, France, Germany and Sweden. The first quarter of 2013 marked a new unemployment rate record for Portugal, as it reached 17.8 per cent—up from 16.9 per cent in the previous quarter—and the government predicted an 18.5 per cent unemployment rate in 2014. Since 2011, the year when Troika arrived to Portugal to apply the bailout program, around 300,000-360,000 people have left the country, many of them qualified young people. In 2014, unemployment was at 13.9%. Around 70,000 jobs were created while 59,000 people became unavailable to work either due to not finding employment for a long time or emigration. The number of part-time employees who are considered under-employed and as such, would like to work more hours per day, is at 251,700 people while 240,300 people are currently inactive (not working, or studying). The Portuguese Central Bank has stated that one third of jobs created are intern-ships by the IEFP public institute.


Wages

The minimum monthly wage in Portugal is 705 euros (from January 1, 2022), having been previously set at 665 euros. This minimum wage was established in January 2021, having previously been raised from 580 euros in 2018. The minimum wage has been increasing since 2015, where it stood at 505 euros. The average gross wage is 1018 euros (US$1378, nearly the same as Poland and Croatia), and the average net wage is 805 euros (US$1090). All wages are paid 14 times a year, twelve monthly salary payments plus one month's pay in the form of a Christmas bonus and one month for a holiday bonus.


Graduate unemployment

In 2008, about 8% of the people with a degree were unemployed, and a much larger proportion was underemployed. This was directly correlated with a general lack of employability and a student's under-preparation for the workplace that was seen among many courses in a number of fields that were offered by certain higher education institutions or departments. The implementation of the Bologna process and other educational reforms, such as the compulsory closing of a number of courses, departments, colleges and private universities after 2005 due to a lack of academic rigour and low teaching standards, was a completely new approach to tackle the problem. In 2007 some major private universities were investigated by state agencies and two were immediately closed. Additionally, a number of degrees of the public system were also discontinued due to lack of quality, low demand from potential students or scarce interest from potential employers in these fields. Secondary and post-secondary non-higher education (intermediate education—''ensino médio'') that consists of technical and vocational education has been redeveloped since 2007 through the governmental policies of the ''XVII Governo Constitucional'' (headed by Prime-Minister José Sócrates). As of March 2014, the graduate unemployment (between 15 and 24 years old) rate is over 35.4%, which represents an increase when comparing to January and February 2014. 57% of the Portuguese youth are planning to emigrate to other countries due to the current (and seemingly the future) fragile state of the economy.


Poverty prevention

History Poverty and inequality are significant social problems that Portugal has attempted to address through various social policy measures. The European economic crisis has increased the number of households that remain below the poverty line in Portugal with the greatest affected being the youth due to high unemployment rates. The current economic crisis experienced across the globe is the leading cause of income inequalities which lead to poor market demand in an economy and lower economic growth in Portugal. The minimum wage policy is aimed at reducing abject poverty and income inequalities in Portugal which will increase demand and lead to economic stability in the long-term. In 2014 after a four-year freeze Portugal increased their minimum wage by 4%. The minimum wage policy which came after negotiations with labor organizations and employers was only possible after substantial recovery of the economy and will increase the sustainability of the economy with aims at reducing poverty. Taxes and transfer payments in Portugal Portugal uses tax and transfer payments to increase equality between high-income earners and the low-income earners in the country. There are significant progressive characteristics of income taxes in Portugal. The government tax policy ensures that the high-income earners face higher taxes in comparison to low-income earners which have enabled the low-income earners to be able to stimulate demand for goods and services in the country economy. The high-income earners pay roughly three times the amount paid by the low-income earners. This approach has been significant in reducing income inequality through means of redistribution. Portuguese GMI The Act no. 19-A/96, 29 June created a policy measure by the name of GMI:
Guaranteed minimum income Guaranteed minimum income (GMI), also called minimum income (or mincome for short), is a social-welfare system that guarantees all citizens or families an income sufficient to live on, provided that certain eligibility conditions are met, typica ...
. This decade old means tested approach ensures a minimum income which grants financial stability for the citizens of Portugal. The GMI is viewed as a right to the Portuguese people, and proves independent of market influences. The GMI program aims at providing the low-income earners who are above 18 years social and economic autonomy to encourage them to participate in the economic growth of the country. In 2001 reports show that 32 percent of those that were previously approved to benefit from the GMI have been discontinued after attaining an income above the minimum threshold. This report shows GMI policy measures as effective in eradicating poverty and increasing income equality in Portugal


Economy by sector

The
tertiary sector The tertiary sector of the economy, generally known as the service sector, is the third of the three economic sectors in the three-sector model (also known as the economic cycle). The others are the primary sector (raw materials) and the second ...
is presently the most important component of the Portuguese economy, representing 75.8% of the
gross value added (GVA) In economics, gross value added (GVA) is the measure of the value of goods and service (economics), services produced in an area, industry or sector of an economy. "Gross value added is the value of output minus the value of intermediate consumptio ...
and employing 68.1% of the working population. It is followed by the industry sector, which represents 21.9% of the GVA, proving 24.5% of the jobs.
Fisheries Fishery can mean either the enterprise of raising or harvesting fish and other aquatic life; or more commonly, the site where such enterprise takes place ( a.k.a. fishing ground). Commercial fisheries include wild fisheries and fish farms, both ...
and
agriculture Agriculture or farming is the practice of cultivating plants and livestock. Agriculture was the key development in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that enabled people to ...
– which represented 25% of the economy in 1960 – had a sharp decrease in its weight, now only representing 2.4% of the GVA, while employing 7.5% of the working population.


Natural resources

Forests are the major natural resource of Portugal, covering about 34% of the country. The most important forest resources are the
pine trees A pine is any conifer tree or shrub in the genus ''Pinus'' () of the family Pinaceae. ''Pinus'' is the sole genus in the subfamily Pinoideae. The World Flora Online created by the Royal Botanic Gardens, Kew and Missouri Botanical Garde ...
(13,500 km2),
cork oak ''Quercus suber'', commonly called the cork oak, is a medium-sized, evergreen oak tree in the section ''Quercus'' sect. ''Cerris''. It is the primary source of cork for wine bottle stoppers and other uses, such as cork flooring and as the cores ...
s (6800 km2), holm oaks (5,340 km2), and
eucalyptus ''Eucalyptus'' () is a genus of over seven hundred species of flowering trees, shrubs or mallees in the myrtle family, Myrtaceae. Along with several other genera in the tribe Eucalypteae, including '' Corymbia'', they are commonly known as euca ...
(2,430 km2).
Cork Cork or CORK may refer to: Materials * Cork (material), an impermeable buoyant plant product ** Cork (plug), a cylindrical or conical object used to seal a container ***Wine cork Places Ireland * Cork (city) ** Metropolitan Cork, also known as G ...
is a major production, with Portugal producing half of the world's cork. Significant mining resources are
lithium Lithium (from el, λίθος, lithos, lit=stone) is a chemical element with the symbol Li and atomic number 3. It is a soft, silvery-white alkali metal. Under standard conditions, it is the least dense metal and the least dense solid el ...
,
tungsten Tungsten, or wolfram, is a chemical element with the symbol W and atomic number 74. Tungsten is a rare metal found naturally on Earth almost exclusively as compounds with other elements. It was identified as a new element in 1781 and first isolat ...
,
tin Tin is a chemical element with the symbol Sn (from la, stannum) and atomic number 50. Tin is a silvery-coloured metal. Tin is soft enough to be cut with little force and a bar of tin can be bent by hand with little effort. When bent, t ...
, and
uranium Uranium is a chemical element with the symbol U and atomic number 92. It is a silvery-grey metal in the actinide series of the periodic table. A uranium atom has 92 protons and 92 electrons, of which 6 are valence electrons. Uranium is weak ...
.


Agriculture

After years of decline, the agriculture in Portugal had a surprising resurgence, involuntarily caused by the Portuguese debt crisis, when a number of highly qualified persons lost their jobs in the tertiary sector and decided to turn themselves to the development of agricultural businesses, despite having little or no experience in this sector. Despite presently representing only a small percentage of the economy, a considerable part of continental Portugal is dedicated to agriculture. The South has developed an extensive monoculture of cereals and
olive tree The olive, botanical name ''Olea europaea'', meaning 'European olive' in Latin, is a species of small tree or shrub in the family Oleaceae, found traditionally in the Mediterranean Basin. When in shrub form, it is known as ''Olea europaea'' 'M ...
s and the
Douro Valley The Comunidade Intermunicipal do Douro () is an administrative division in Portugal. It replaced the ''Comunidade Urbana do Douro'', created in 2004. It takes its name from the Douro River. The seat of the intermunicipal community is Vila Real. D ...
of
vineyard A vineyard (; also ) is a plantation of grape-bearing vines, grown mainly for winemaking, but also raisins, table grapes and non-alcoholic grape juice. The science, practice and study of vineyard production is known as viticulture. Vineyards ...
s. Olive trees (4,000 km2; 1,545 sq mi), vineyards (3,750 km2; 1,450 sq mi), wheat (3,000 km2; 1,160 sq mi) and maize (2,680 km2; 1,035 sq mi) are produced in vast areas. Portuguese wine and
olive oil Olive oil is a liquid fat obtained from olives (the fruit of ''Olea europaea''; family Oleaceae), a traditional tree crop of the Mediterranean Basin, produced by pressing whole olives and extracting the oil. It is commonly used in cooking: f ...
are especially praised by nationals for their quality, thus external competition (even at much lower prices) has had little effect on consumer demand. Portugal is a traditional wine grower, and has exported its wines since the dawn of western civilization;
Port Wine Port wine (also known as vinho do Porto, , or simply port) is a Portuguese fortified wine produced in the Douro Valley of northern Portugal. It is typically a sweet red wine, often served with dessert, although it also comes in dry, semi- ...
, ''
Vinho Verde Vinho Verde () (literally 'green wine') refers to Portuguese wine that originated in the historic Minho province in the far north of the country. The modern-day 'Vinho Verde' region, originally designated in 1908, includes the old Minho provi ...
'' and
Madeira Wine Madeira is a fortified wine made on the Portuguese Madeira Islands, off the coast of Africa. Madeira is produced in a variety of styles ranging from dry wines which can be consumed on their own, as an apéritif, to sweet wines usually consumed ...
are the leading wine exports. Portugal is also a quality producer of fruits, namely the
Algarve The Algarve (, , ; from ) is the southernmost NUTS II region of continental Portugal. It has an area of with 467,495 permanent inhabitants and incorporates 16 municipalities ( ''concelhos'' or ''municípios'' in Portuguese). The region has it ...
oranges,
cherries A cherry is the fruit of many plants of the genus ''Prunus'', and is a fleshy drupe (stone fruit). Commercial cherries are obtained from cultivars of several species, such as the sweet ''Prunus avium'' and the sour ''Prunus cerasus''. The nam ...
(large production in Cova da Beira and Alto Alentejo), Oeste region's ''
pêra rocha Pera may refer to: Places * Pera (Beyoğlu), a district in Istanbul formerly called Pera, now called Beyoğlu ** Galata, a neighbourhood of Beyoğlu, often referred to as Pera in the past * Pêra (Caparica), a Portuguese locality in the district o ...
'' (a type of pear) and Alcobaça’s apples (''maçã de Alcobaça''). More recently, niche crops such as blueberry and raspberry have seen great increase in production, mainly for exporting. Other exports include horticulture and floriculture products, beet sugar, sunflower oil,
cork Cork or CORK may refer to: Materials * Cork (material), an impermeable buoyant plant product ** Cork (plug), a cylindrical or conical object used to seal a container ***Wine cork Places Ireland * Cork (city) ** Metropolitan Cork, also known as G ...
, and tobacco.


Fisheries

The Portuguese fishing industry is fairly large and diversified. Fishing vessels classified according to the area in which they operate, can be divided into local fishing vessels, coastal fishing vessels and long-distance fishing vessels. The local fleet is mainly composed of small traditional vessels (less than 5
gross tonnage Gross tonnage (GT, G.T. or gt) is a nonlinear measure of a ship's overall internal volume. Gross tonnage is different from gross register tonnage. Neither gross tonnage nor gross register tonnage should be confused with measures of mass or weigh ...
), comprising, in 2004, 87% of the total fishing fleet and accounting for 8% of the total tonnage. These vessels are usually equipped to use more than one fishing method, such as hooks, gill nets and traps, and constitute the so-called polyvalent segment of the fleet. Their physical output is low but reasonable levels of income are attained by virtue of the high commercial value of the species they capture: octopus, black scabbardfish, conger, pouting, hake and anglerfish. Purse
seine fishing Seine fishing (or seine-haul fishing; ) is a method of fishing that employs a surrounding net, called a seine, that hangs vertically in the water with its bottom edge held down by weights and its top edge buoyed by floats. Seine nets can be dep ...
is also part of the local fleet and has, on the mainland, only one target species: the sardine. This fishery represents 37% of total landings. Portugal's Exclusive Economic Zone has 1,727,408 km2, being the 3rd largest of the EU and the 20th largest in the world. The coastal fishing fleet accounted for only 13% of vessels but had the largest GT (93%). These vessels operate in areas farther from the coast, and even outside the Portugal's Exclusive Economic Zone. The coastal fishing fleet comprises polyvalent, purse seine and trawl fishing vessels. The trawlers operate only on the mainland shelf and target demersal species such as horse mackerel, blue whiting, octopus and crustaceans. The crustacean trawling fishery targets Norway lobster, red shrimp and deepwater rose shrimp. The most important fish species landed in Portugal in 2004 were sardine, mackerel and horse mackerel, representing 37%, 9% and 8% of total landings by weight, and 13%, 1% and 8% of total value, respectively. Molluscs accounted for only 12% of total landings in weight, but 22% of total landings in value. Crustaceans were 0.6% of the total landings by weight and 5% by value.


Industry

The Portuguese industry had a high development, especially after the Second World War, achieving a peak in 1974, when it represented almost 35% of the GDP of Portugal and achieved a high degree of diversification. Presently, the major industries in Portugal include:
machinery A machine is a physical system using power to apply forces and control movement to perform an action. The term is commonly applied to artificial devices, such as those employing engines or motors, but also to natural biological macromolecule ...
, electrical and
electronics The field of electronics is a branch of physics and electrical engineering that deals with the emission, behaviour and effects of electrons using electronic devices. Electronics uses active devices to control electron flow by amplification ...
industries, automotive and
shipbuilding Shipbuilding is the construction of ships and other floating vessels. It normally takes place in a specialized facility known as a shipyard. Shipbuilders, also called shipwrights, follow a specialized occupation that traces its roots to befor ...
industries,
injection moulding Injection moulding (U.S. spelling: injection molding) is a manufacturing process for producing parts by injecting molten material into a mould, or mold. Injection moulding can be performed with a host of materials mainly including metals (for ...
,
plastic Plastics are a wide range of synthetic or semi-synthetic materials that use polymers as a main ingredient. Their plasticity makes it possible for plastics to be moulded, extruded or pressed into solid objects of various shapes. This adaptab ...
s and
ceramic A ceramic is any of the various hard, brittle, heat-resistant and corrosion-resistant materials made by shaping and then firing an inorganic, nonmetallic material, such as clay, at a high temperature. Common examples are earthenware, porcelain ...
s industries, textile, footwear and leather industries,
oil refinery An oil refinery or petroleum refinery is an industrial process plant where petroleum (crude oil) is transformed and refined into useful products such as gasoline (petrol), diesel fuel, asphalt base, fuel oils, heating oil, kerosene, lique ...
,
petrochemistry Petrochemicals (sometimes abbreviated as petchems) are the chemical products obtained from petroleum by refining. Some chemical compounds made from petroleum are also obtained from other fossil fuels, such as coal or natural gas, or renewable sou ...
and
cement A cement is a binder, a chemical substance used for construction that sets, hardens, and adheres to other materials to bind them together. Cement is seldom used on its own, but rather to bind sand and gravel ( aggregate) together. Cement mix ...
industries, beverages and
food Food is any substance consumed by an organism for nutritional support. Food is usually of plant, animal, or fungal origin, and contains essential nutrients, such as carbohydrates, fats, proteins, vitamins, or minerals. The substance is inge ...
industries and furniture, pulp and paper, wood and
cork Cork or CORK may refer to: Materials * Cork (material), an impermeable buoyant plant product ** Cork (plug), a cylindrical or conical object used to seal a container ***Wine cork Places Ireland * Cork (city) ** Metropolitan Cork, also known as G ...
industries. Automotive and other mechanical industries such as bicycle industry

are primarily located in and around
Setúbal Setúbal (, , ; cel-x-proto, Caetobrix) is a city and a municipality in Portugal. The population in 2014 was 118,166, occupying an area of . The city itself had 89,303 inhabitants in 2001. It lies within the Lisbon metropolitan area. In the ti ...
,
Porto Porto or Oporto () is the second-largest city in Portugal, the capital of the Porto District, and one of the Iberian Peninsula's major urban areas. Porto city proper, which is the entire municipality of Porto, is small compared to its metropo ...
, Lisbon, Aveiro,
Braga Braga ( , ; cel-x-proto, Bracara) is a city and a municipality, capital of the northwestern Portuguese district of Braga and of the historical and cultural Minho Province. Braga Municipality has a resident population of 193,333 inhabitants (in ...
and
Mangualde Mangualde () is a municipality in the subregion of Dão-Lafões (historical Beira Interior), central region of Portugal. The population in 2011 was 19,880, in an area of 219.26 km2. History The region of Mangualde has been a crossroads of ma ...
.
Coimbra Coimbra (, also , , or ) is a city and a municipality in Portugal. The population of the municipality at the 2011 census was 143,397, in an area of . The fourth-largest urban area in Portugal after Lisbon, Porto Metropolitan Area, Porto, and Bra ...
and Oeiras have growing technological-based industries, including
pharmaceuticals A medication (also called medicament, medicine, pharmaceutical drug, medicinal drug or simply drug) is a drug used to diagnose, cure, treat, or prevent disease. Drug therapy (pharmacotherapy) is an important part of the medical field and rel ...
and software.
Sines Sines () is a city and a municipality in Portugal. The municipality, divided into two parishes, has around 14,214 inhabitants (2021) in an area of . Sines holds an important oil refinery and several petrochemical industries. It is also a popular ...
has the largest
oil refinery An oil refinery or petroleum refinery is an industrial process plant where petroleum (crude oil) is transformed and refined into useful products such as gasoline (petrol), diesel fuel, asphalt base, fuel oils, heating oil, kerosene, lique ...
in the country and is a major
petrochemical Petrochemicals (sometimes abbreviated as petchems) are the chemical products obtained from petroleum by refining. Some chemical compounds made from petroleum are also obtained from other fossil fuels, such as coal or natural gas, or renewable sou ...
centre, as well as the busiest port in Portugal.
Maia Maia (; Ancient Greek: Μαῖα; also spelled Maie, ; la, Maia), in ancient Greek religion and mythology, is one of the Pleiades and the mother of Hermes, one of the major Greek gods, by Zeus, the king of Olympus. Family Maia is the daugh ...
has one of the largest industrial parks of the country, including noted
wood processing Wood processing is an engineering discipline in the wood industry comprising the production of forest products, such as pulp and paper, construction materials, and tall oil. Paper engineering is a subfield of wood processing. The major wood pro ...
and food industries.
Figueira da Foz Figueira da Foz (), also known as Figueira for short, is a city and a municipality in the Coimbra District, in Portugal. Practically at the midpoint of the Iberian Peninsula's Atlantic coast, it is located at the mouth of the Mondego River, west ...
and Setúbal are major centres of pulp and paper industry.
Marinha Grande Marinha Grande () is a municipality in the Leiria District, Portugal. The population in 2021 was 39,032, in an area of 187.25 km². The city itself has a population of 32,330. It is located right in the middle of the 700-year-old Leiria pine ...
is the most reputed
glass making Glass production involves two main methods – the float glass process that produces sheet glass, and glassblowing that produces bottles and other containers. It has been done in a variety of ways during the history of glass. Glass container ...
centre of Portugal.
Leiria Leiria (; cel-x-proto, ɸlāryo) is a city and municipality in the Central Region of Portugal. It is the 2nd largest city in that same region, with a municipality population of 128,640 (as of 2021) in an area of . It is the seat of its own distr ...
,
Oliveira de Azeméis Oliveira de Azeméis () is a city and a municipality located in Porto Metropolitan Area in Portugal. Administratively, the municipality belongs to the District of Aveiro. The population of the municipality in 2011 was 68,611, in an area of 161.1 ...
,
Vale de Cambra Vale de Cambra (; cel-x-proto, Cambra) is a city and a municipality in Portugal. The population in 2011 was 22,864, in an area of 147.33 km2. It had 21,440 electors in 2006. The city itself has about 4,100 inhabitants and is located in the Vi ...
and
Viseu Viseu () is a city and municipality in the Centro Region of Portugal and the capital of the district of the same name, with a population of 100,000 inhabitants, and center of the Viseu Dão Lafões intermunipical community, with 267,633 inhabi ...
, have important light industries, including
injection moulding Injection moulding (U.S. spelling: injection molding) is a manufacturing process for producing parts by injecting molten material into a mould, or mold. Injection moulding can be performed with a host of materials mainly including metals (for ...
and plastics.
Viana do Castelo Viana do Castelo () is a municipality and seat of the district of Viana do Castelo in the Norte Region of Portugal. The population in 2011 was 88,725, in an area of 319.02 km². The urbanized area of the municipality, comprising the city, ...
and Setúbal are centres of ship building and repair industries. Modern non-traditional technology-based industries like
aerospace Aerospace is a term used to collectively refer to the atmosphere and outer space. Aerospace activity is very diverse, with a multitude of commercial, industrial and military applications. Aerospace engineering consists of aeronautics and astrona ...
,
biotechnology Biotechnology is the integration of natural sciences and engineering sciences in order to achieve the application of organisms, cells, parts thereof and molecular analogues for products and services. The term ''biotechnology'' was first used b ...
and information technology, have been developed in several locations across the country. Alverca,
Covilhã Covilhã () is a city and a municipality in the Centro region, Portugal. The city proper had 34,772 inhabitants in 2001. The municipality population in 2011 was 51,797, in an area of . It is located in the Beiras e Serra da Estrela subregion and ...
,
Évora Évora ( , ) is a city and a municipality in Portugal. It has 53,591 inhabitants (2021), in an area of 1307.08 km2. It is the historic capital of the Alentejo and serves as the seat of the Évora District. Due to its well-preserved old to ...
, and
Ponte de Sor Ponte de Sor () is a municipality in Portalegre District in Portugal. The population in 2011 was 16,722, in an area of 839.71 km2. The present Mayor is Hugo Hilário, elected by the Socialist Party. The municipal holiday is Easter Monday. Ec ...
are the main centres of Portuguese
aerospace industry Aerospace is a term used to collectively refer to the atmosphere and outer space. Aerospace activity is very diverse, with a multitude of commercial, industrial and military applications. Aerospace engineering consists of aeronautics and astr ...
, which is led by the local branch of the Brazilian
Embraer Embraer S.A. () is a Brazilian multinational aerospace manufacturer that produces commercial, military, executive and agricultural aircraft, and provides aeronautical services. It was founded in 1969 in São José dos Campos, São Paulo, where i ...
and by
OGMA OGMA – Indústria Aeronáutica de Portugal S.A. is a Portuguese aerospace company focused on aircraft maintenance and manufacturing. History OGMA was founded as part of the reorganisation of the Portuguese Army's Aeronautic Service on June 2 ...
. Since after the turn of the 21st century, many major biotechnology and information technology industries have been founded and are concentrated in the metropolitan areas of
Lisbon Lisbon (; pt, Lisboa ) is the capital and largest city of Portugal, with an estimated population of 544,851 within its administrative limits in an area of 100.05 km2. Grande Lisboa, Lisbon's urban area extends beyond the city's administr ...
,
Porto Porto or Oporto () is the second-largest city in Portugal, the capital of the Porto District, and one of the Iberian Peninsula's major urban areas. Porto city proper, which is the entire municipality of Porto, is small compared to its metropol ...
, Braga, Coimbra and Aveiro.


Energy

Since the late 1990s, when
wind power Wind power or wind energy is mostly the use of wind turbines to electricity generation, generate electricity. Wind power is a popular, sustainable energy, sustainable, renewable energy source that has a much smaller Environmental impact of wi ...
was virtually nonexistent in Portugal, the country has become the 6th producer of this kind of renewable energy. Along with the traditional Hydroelectric energy, the Portuguese companies, including the biggest one in the country – EDP – and with the support of the government have heavily invested in new kinds of renewable energy, from then on. In 2010, 52% of the energy produced in Portugal was renewable. In 2013, 61.7% of the energy produced was renewable, including 30.4% hydroelectric, 24.1% from wind, 5.2% from biomass, 0.9% solar energy and 1.1% from other renewable energy sources, particularly geothermical energy in the
Azores ) , motto =( en, "Rather die free than subjected in peace") , anthem= ( en, "Anthem of the Azores") , image_map=Locator_map_of_Azores_in_EU.svg , map_alt=Location of the Azores within the European Union , map_caption=Location of the Azores wi ...
. Thanks to this energetic strategy, during 2013 Portugal had reduced to only 5% the energy that it imports. Fossil fuels are still the source of 38.3% or the energy produced, but the trend is to diminish. In 2013, the increase in the production of clean energy helped to save 806 million Euros in the imports of fossil fuels and CO2 emission licenses. In May 2016, Portugal became the second country in the world to be able to have all its energy consumption fully covered by renewable energy alone, for four consecutive days. In the 1970s, the country abandoned the plan to install nuclear plants and opted not to invest in
nuclear power Nuclear power is the use of nuclear reactions to produce electricity. Nuclear power can be obtained from nuclear fission, nuclear decay and nuclear fusion reactions. Presently, the vast majority of electricity from nuclear power is produced b ...
, so there are no such plants in Portugal.


Services

The
tertiary sector The tertiary sector of the economy, generally known as the service sector, is the third of the three economic sectors in the three-sector model (also known as the economic cycle). The others are the primary sector (raw materials) and the second ...
has grown, producing 74.4% of the GDP and providing jobs for 65.9% of the working population. The most significant growth rates are found in the trade sector, due to the introduction of modern means of distribution, transport and telecommunications. Financial tertiary companies have benefited from
privatisation Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
, also gaining in terms of efficiency.
Tourism in Portugal Tourism in Portugal serves millions of international and domestic tourists. Tourists visit to see cities, historic landmarks, enjoy beaches, or religious sites. As of 2019, Portugal had 27 million visitors. The most popular destinations ...
has developed significantly, generating 17.3% of GDP in 2017 and forecasted to reach 20.5% of GDP in 2018. In 2017, the number of foreign tourists jumped 12 percent to 12.7 million. Including domestic tourists, the total is about 21 million. Some large Portuguese companies in the services' sector have committed themselves to internationalize their services, like the retailer
Jerónimo Martins Jerónimo Martins SGPS, SA (JM) is a Portuguese corporate group that operates in food distribution and specialised retail. It operates more than 4,900 stores in Portugal, Poland, and Colombia. The group is the majority owner of Jerónimo Mart ...
, which holds the largest supermarket chain in Poland and is also investing in Colombia. Worth to notice is also TAP Portugal, a company often used by transit passengers traveling between Europe, Africa and Latin America (mainly Brazil), which is particularly regarded by its safety record.


Financial market

In the Portuguese
financial market A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, raw materials and precious metals, which are known in the financial markets ...
, the major
stock exchange A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for t ...
is the
Euronext Lisbon Euronext Lisbon is a stock exchange in Lisbon, Portugal. It is part of Euronext pan-European exchange. Euronext Lisbon trades equities, public and private bonds, participation bonds, warrants, corporate warrants, investment trust units, and exc ...
which is part of the NYSE Euronext, the first global stock exchange. It is supervised and regulated by the
Portuguese Securities Market Commission The Portuguese Securities Market Commission, also known by its initials as "CMVM", was incepted via Decree-Law No. 142-A/91, of 10 April, and established on 10 May 1991 following 30 days after its publication. It supervises and regulates securities ...
. The
PSI-20 The PSI-20 (an acronym of Portuguese Stock Index) is a benchmark stock market index of companies that trade on Euronext Lisbon, the main stock exchange of Portugal. The index tracks the prices of the twenty listings with the largest market cap ...
is Portugal's most selective and widely known
stock index In finance, a stock index, or stock market index, is an index that measures a stock market, or a subset of the stock market, that helps investors compare current stock price levels with past prices to calculate market performance. Two of the pri ...
. Portugal's
central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a centra ...
is the ''
Banco de Portugal The Banco de Portugal (English: Bank of Portugal) is the central bank of the Portuguese Republic. The bank was founded by royal charter in 1846, during the reign of Queen Maria II of Portugal, by a merger of the '' Banco de Lisboa'' (Bank of Lis ...
'', which is an integral part of the
European System of Central Banks The European System of Central Banks (ESCB) is an institution that comprises the European Central Bank (ECB) and the national central banks (NCBs) of all 27 member states of the European Union (EU). Its objective is to ensure price stability ...
. The largest Portuguese banks are
Banco Comercial Português Portuguese Commercial Bank ( pt, Banco Comercial Português, BCP) is a Portuguese bank that was founded in 1985 and is the largest private bank in the country. BCP is a member of the Euronext 100 stock index and its current chief executive offic ...
and the state-owned
Caixa Geral de Depósitos Caixa Geral de Depósitos (CGD) () is a Portuguese state-owned banking corporation, and the largest bank in Portugal, established in Lisbon in 1876. CGD now has presence in 23 countries spanning four continents through branches, representative ...
.Portugal: Financial System Stability Assessment, including Reports on the Observance of Standards and Codes on the following topics: Banking Supervision, Securities Regulation, and Insurance Regulation
IMF, (October 2006)
Portuguese banks hold strategic stakes in other sectors of the economy, including the insurance sector. Foreign bank participation is relatively high as is state ownership through the Caixa Geral de Depósitos (CGD). Overall, Portugal's financial system is sound, well managed and competitive, with shorter-term risks and vulnerabilities quite well contained, and with the system buttressed by a strong financial policy framework. Despite being relatively small and concentrated, Portugal's banking system generally compares well with other
European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are located primarily in Europe, Europe. The union has a total area of ...
(EU) countries in terms of
efficiency Efficiency is the often measurable ability to avoid wasting materials, energy, efforts, money, and time in doing something or in producing a desired result. In a more general sense, it is the ability to do things well, successfully, and without ...
,
profitability In economics, profit is the difference between the revenue that an economic entity has received from its outputs and the total cost of its inputs. It is equal to total revenue minus total cost, including both explicit and implicit costs. It i ...
, and
asset In financial accountancy, financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value ...
quality, with
solvency Solvency, in finance or business, is the degree to which the current assets of an individual or entity exceed the current liabilities of that individual or entity. Solvency can also be described as the ability of a corporation to meet its long-ter ...
also close to European levels. Across all the financial sub-sectors, and with particular reference to the larger institutions, supervision of Portuguese financial institutions is active, professional and well organized. The insurance sector has performed well, partly reflecting a rapid deepening of the market in Portugal. While sensitive to various types of market and underwriting
risk In simple terms, risk is the possibility of something bad happening. Risk involves uncertainty about the effects/implications of an activity with respect to something that humans value (such as health, well-being, wealth, property or the environme ...
s, both the life and non-life sectors, overall, are estimated to be able to withstand a number of severe shocks, even though the impact on individual insurers varies widely.


Competitiveness


Portugal's competitiveness in the world

The
Global Competitiveness Report The ''Global Competitiveness Report'' (GCR) is a yearly report published by the World Economic Forum. Since 2004, the ''Global Competitiveness Report'' ranks countries based on the Global Competitiveness Index, developed by Xavier Sala-i-Martin an ...
for 2014–2015, published by the
World Economic Forum The World Economic Forum (WEF) is an international non-governmental and lobbying organisation based in Cologny, canton of Geneva, Switzerland. It was founded on 24 January 1971 by German engineer and economist Klaus Schwab. The foundation, ...
, placed Portugal on the 36th position on the economic index.http://www3.weforum.org/docs/GCR2013-14/GCR_Rankings_2013-14.pdf This represents a sharp increase from the 51st position where Portugal appeared in 2013–2014.


Competitiveness by city

A study concerning
competitiveness In economics, competition is a scenario where different economic firmsThis article follows the general economic convention of referring to all actors as firms; examples in include individuals and brands or divisions within the same (legal) firm ...
of the 18 Portuguese district capitals, complying with
World Economic Forum The World Economic Forum (WEF) is an international non-governmental and lobbying organisation based in Cologny, canton of Geneva, Switzerland. It was founded on 24 January 1971 by German engineer and economist Klaus Schwab. The foundation, ...
methodology, was made by
Minho University The University of Minho (''Universidade do Minho'') is a public university in Portugal, divided into the following campuses: * Largo do Paço (rectorate), in Braga * Campus of Gualtar, in Braga * Convento dos Congregados, in Braga * Campus of Az ...
economics researchers. It was published in Público newspaper on 30 September 2006. The best-ranked cities in the study were
Évora Évora ( , ) is a city and a municipality in Portugal. It has 53,591 inhabitants (2021), in an area of 1307.08 km2. It is the historic capital of the Alentejo and serves as the seat of the Évora District. Due to its well-preserved old to ...
, Lisbon and
Coimbra Coimbra (, also , , or ) is a city and a municipality in Portugal. The population of the municipality at the 2011 census was 143,397, in an area of . The fourth-largest urban area in Portugal after Lisbon, Porto Metropolitan Area, Porto, and Bra ...
., Ranking: #
Évora Évora ( , ) is a city and a municipality in Portugal. It has 53,591 inhabitants (2021), in an area of 1307.08 km2. It is the historic capital of the Alentejo and serves as the seat of the Évora District. Due to its well-preserved old to ...
: 7,293 #
Lisbon Lisbon (; pt, Lisboa ) is the capital and largest city of Portugal, with an estimated population of 544,851 within its administrative limits in an area of 100.05 km2. Grande Lisboa, Lisbon's urban area extends beyond the city's administr ...
: 6,454 #
Coimbra Coimbra (, also , , or ) is a city and a municipality in Portugal. The population of the municipality at the 2011 census was 143,397, in an area of . The fourth-largest urban area in Portugal after Lisbon, Porto Metropolitan Area, Porto, and Bra ...
: 6,042 # Beja: 5,660 #
Leiria Leiria (; cel-x-proto, ɸlāryo) is a city and municipality in the Central Region of Portugal. It is the 2nd largest city in that same region, with a municipality population of 128,640 (as of 2021) in an area of . It is the seat of its own distr ...
: 5,609 # Castelo Branco: 5,608 # Aveiro: 5,452 # Guarda: 5,178 # Santarém: 5,037 # Portalegre: 4,711 #
Viseu Viseu () is a city and municipality in the Centro Region of Portugal and the capital of the district of the same name, with a population of 100,000 inhabitants, and center of the Viseu Dão Lafões intermunipical community, with 267,633 inhabi ...
: 4,628 #
Vila Real Vila Real () is the capital and largest city of the Vila Real District, in the North region. It is also the seat of the Douro intermunicipal community and of the Trás-os-Montes e Alto Douro historical province. The Vila Real municipality cover ...
: 5,514 # Bragança: 4,271 #
Setúbal Setúbal (, , ; cel-x-proto, Caetobrix) is a city and a municipality in Portugal. The population in 2014 was 118,166, occupying an area of . The city itself had 89,303 inhabitants in 2001. It lies within the Lisbon metropolitan area. In the ti ...
: 4,070 #
Braga Braga ( , ; cel-x-proto, Bracara) is a city and a municipality, capital of the northwestern Portuguese district of Braga and of the historical and cultural Minho Province. Braga Municipality has a resident population of 193,333 inhabitants (in ...
: 4,055 # Faro: 3,971 #
Viana do Castelo Viana do Castelo () is a municipality and seat of the district of Viana do Castelo in the Norte Region of Portugal. The population in 2011 was 88,725, in an area of 319.02 km². The urbanized area of the municipality, comprising the city, ...
: 3,859 #
Porto Porto or Oporto () is the second-largest city in Portugal, the capital of the Porto District, and one of the Iberian Peninsula's major urban areas. Porto city proper, which is the entire municipality of Porto, is small compared to its metropo ...
: 3,577


Domestic issues

*Forest fires: Like in other countries with very hot summers and seasonal drying of soils and vegetation, every year large areas of the Portuguese forest are destroyed. This has an important impact on the economy because many people and industries depend on
forestry Forestry is the science and craft of creating, managing, planting, using, conserving and repairing forests, woodlands, and associated resources for human and environmental benefits. Forestry is practiced in plantations and natural stands. Th ...
related activities. It is also a very dramatic ecological problem and a safety issue for the populations. *Portugal's public debt: The Portuguese national debt is around 125% of the GDP as of June 2017. This problem is a threat to the Portuguese economy and the State's financial sustainability. *A bloated public sector: The public sector has been generally considered a very large, expensive and inefficient part of the economy. An excess of public employees and useless bureaucracy results in the loss of millions of euros every year. From the ''XVI Governo Constitucional'' government, headed by Prime Minister José Durão Barroso, to the ''XVII Governo Constitucional'' government, headed by Prime Minister José Sócrates (which tried to create new rules and implement reforms aiming at better efficiency, rationalized resource allocation, fight civil servant excedentary overcapacity (''excedentários'') and less bureaucracy for both citizens and companies – e.g.: ''empresa na hora'

''PRACE – Programa de Reestruturação da Administração Central do Estado'', and SIMPLEX – Programa de Simplificação Administrativa e Legislativa, among others), the "
public expenditure Public expenditure is spending made by the government of a country on collective needs and wants, such as pension, provisions, security, infrastructure, etc. Until the 19th century, public expenditure was limited as laissez faire philosophies be ...
problem" has been a major concern in Portugal, however it had little effect, and the country's public debt and deficit were both out of control by 2010. In addition, João Bilhim who directed in 2005 the committee responsible for the Programme for Restructuring the State's Central Administration (PRACE) said to be disappointed with the results of the reforms tried in the mid-2000s. *Corruption: According to the 2008
Corruption Perceptions Index The Corruption Perceptions Index (CPI) is an index which ranks countries "by their perceived levels of public sector corruption, as determined by expert assessments and opinion surveys." The CPI generally defines corruption as an "abuse of entru ...
of countries published by
Transparency International Transparency International e.V. (TI) is a German registered association founded in 1993 by former employees of the World Bank. Based in Berlin, its nonprofit and non-governmental purpose is to take action to combat global corruption with civil ...
, Portugal had the 32nd lowest level of corruption out of 180 countries. In 2012 it had slumped to a three-way tie for 33rd place. (By comparison, in the same years, the United States ranked 18th and 19th). Nevertheless, corruption has become an issue of major political and economic significance for the Portuguese. The responsible authorities and many civic associations and think tanks are trying to combat corruption before it increases further. Many abusive lobbies and corruption schemes are related to concessions, unclear approvals to contractors and economic groups, or job creation for and commercial agreements with friends and family members, mainly involving the huge public sector and companies. Some cases are well known and were widely reported in the media, such as the affairs in several municipalities involving local town hall officials and businesspersons, as well as a number of politicians with wider responsibilities and power. Notable criminal cases include the '' Face Oculta'', the Oeiras Municipality Mayor Isaltino Morais scandal, the '' Apito Dourado'' and the '' Saco Azul de Felgueiras''.


Education, training and research in business and economic sciences

There are many
higher education Higher education is tertiary education leading to award of an academic degree. Higher education, also called post-secondary education, third-level or tertiary education, is an optional final stage of formal learning that occurs after completi ...
institutions awarding academic degrees in economics and
business management Business administration, also known as business management, is the administration of a commercial enterprise. It includes all aspects of overseeing and supervising the business operations of an organization. From the point of view of management ...
, spread across the whole country. Programmes in management and administration are offered by almost every Portuguese
universities A university () is an institution of higher (or tertiary) education and research which awards academic degrees in several academic disciplines. Universities typically offer both undergraduate and postgraduate programs. In the United States, t ...
and polytechnics. Programmes in economics are offered by all public and by some private universities. Among the largest and most reputed universities, which host an economics department and develop research on this area, are the
University of Lisbon The University of Lisbon (ULisboa; pt, Universidade de Lisboa, ) is a public research university in Lisbon, and the largest university in Portugal. It was founded in 2013, from the merger of two previous public universities located in Lisbon, th ...
(through its ISEG - Lisbon School of Economics and Management), the ISCTE – Lisbon University Institute, the
Portuguese Catholic University The Catholic University of Portugal (Portuguese: ''Universidade Católica Portuguesa'', pronounced nivɨɾsiˈðad(ɨ) kɐˈtɔlikɐ puɾtuˈɣezɐ, also referred to as Católica or UCP for short, is a concordat university (non-state-run univers ...
(through their Católica Lisbon School of Business and Economics and Católica Porto School of Economics and Management), the University of Porto (through its ''Faculdade de Economia''); the ''
Universidade Nova de Lisboa NOVA University Lisbon ( pt, Universidade NOVA de Lisboa, ), or just NOVA, is a Portuguese public university whose rectorate is located in Campolide, Lisbon. Founded in 1973, it is the newest of the public universities in the Portuguese capital c ...
'' (through its NOVA SBE –
Nova School of Business and Economics Nova School of Business & Economics (Nova SBE) is a leading business school in Portugal and one of the best business schools in the world in the areas of Economics, Finance and Management. It offers Bachelor's, Master's, Ph.D., MBA as well as Ex ...
); the
Minho University The University of Minho (''Universidade do Minho'') is a public university in Portugal, divided into the following campuses: * Largo do Paço (rectorate), in Braga * Campus of Gualtar, in Braga * Convento dos Congregados, in Braga * Campus of Az ...
(through its ''Escola de Economia e Gestão'' ); and the
University of Coimbra The University of Coimbra (UC; pt, Universidade de Coimbra, ) is a Public university, public research university in Coimbra, Portugal. First established in Lisbon in 1290, it went through a number of relocations until moving permanently to Coi ...
(through its ''Faculdade de Economia'' ). The Financial Times European Business school ranking has consistently placed the Católica Lisbon School of Business and Economics and the Nova School of Business and Economics among the top European business and economics schools. Besides the higher education institutions, both the
Bank of Portugal The Banco de Portugal (English: Bank of Portugal) is the central bank of the Portuguese Republic. The bank was founded by royal charter in 1846, during the reign of Queen Maria II of Portugal, by a merger of the '' Banco de Lisboa'' (Bank of Lis ...
and the Statistics Portugal develop lengthy and thoroughly systematic research and make reports on the Portuguese economy.


Poverty

In 2012, 45.4% of the population were at risk of poverty before social transfers, compared to the EU27 average (Croatia not yet included) of 44.1%. When pensions are included the percentage goes down to 25.2%. 17.5% of the population were at risk of poverty after social transfers, meaning their disposable income was below their national at-risk-of-poverty threshold, which is set at 60% of the national median income per adult equivalent. This is just above the European Union average of 17%, and compares favorably to other Southern European countries, such as Spain (22.2%), Italy (19.4%) and Greece (23.1%). In January 2015, the poverty stats was updated to 2013: 19.5% of the population were at risk of poverty after social transfers, meaning their disposable income was below their national at-risk-of-poverty threshold, which is set at 60% of the national median income per adult equivalent numbering nearly 2 million people. According to ISEG economist, Carlos Farinha Rodrigues Portugal went back 10 years in terms of social reality, having lost all the progress that was made until 2009. The risk of poverty after social transfers for men is 18.9%, 20% for women, 25.6% for children, 38.4% for monoparental families with at least one child, 15.4% for two parents and on child and 28.8% for other aggregates with children (elderly, etc.). The National Statistics Institute made a separate calculation, basing their data in 2009 in order to have a poverty line that doesn't decrease because of the income decreases associated with the crisis: with this calculation, the poverty risk increase is far greater with 17.9% in 2009 to 25.9% 4 years later. The Prime-Minister,
Pedro Passos Coelho Pedro Manuel Mamede Passos Coelho (; born 24 July 1964) is a Portuguese politician and university guest lecturer who was the 118th prime minister of Portugal, in office from 2011 to 2015. He was the leader of the Social Democratic Party (PSD) b ...
, has stated that these numbers do not reflect the current situation.


Food Insecurity

In 2005 and 2006, the National Health Survey gathered information on
food security Food security speaks to the availability of food in a country (or geography) and the ability of individuals within that country (geography) to access, afford, and source adequate foodstuffs. According to the United Nations' Committee on World F ...
which showed that those making a monthly household income of 251-500 euros made up 37.3% of the food insecure, which was quite contrary to their counterparts. For instance, those making more than a monthly household income of 901 euros made up only 15.9% of the food insecure. After the Portuguese financial crisis that began in 2010, food insecurity escalated and notably affected those in poorer regions in Portugal—such as Alentejo and Algarve. In the Algarve region, total food insecurity increased from 56.9% to 77.1% from 2011 to 2012, and the severe food insecurity increased from 13.2% to 41.7%. Meanwhile, the national food insecurity only increased by 0.5% (48.6% to 49.1%) and the severe food insecurity of other regions, such as Centro and Norte, started much lower and only increase by approximately 3%. Overall, the general prevalence of food insecurity from 2011 to 2013 in Portugal was practically unchanged; however, the less fortunate and poorer regions were seen to have taken the toll, despite future progress.


See also

*
Government of Portugal The Government of Portugal is one of the four sovereignty bodies of the Portuguese Republic, together with the President of Portugal, President of the Republic, the Assembly of the Republic (Portugal), Assembly of the Republic and Judiciary of Port ...
* Portuguese national debt * List of taxes in Portugal


References


External links


OECD's Portugal country Web site

OECD Economic Survey of Portugal

World Bank Summary Trade Statistics Portugal
* Tariffs applied by Portugal as provided by ITC'
Market Access Map
an online database of customs tariffs and market requirements {{World Trade Organization
Portugal Portugal, officially the Portuguese Republic ( pt, República Portuguesa, links=yes ), is a country whose mainland is located on the Iberian Peninsula of Southwestern Europe, and whose territory also includes the Atlantic archipelagos of ...
Portugal Portugal, officially the Portuguese Republic ( pt, República Portuguesa, links=yes ), is a country whose mainland is located on the Iberian Peninsula of Southwestern Europe, and whose territory also includes the Atlantic archipelagos of ...
Portugal Portugal, officially the Portuguese Republic ( pt, República Portuguesa, links=yes ), is a country whose mainland is located on the Iberian Peninsula of Southwestern Europe, and whose territory also includes the Atlantic archipelagos of ...
Portugal Portugal, officially the Portuguese Republic ( pt, República Portuguesa, links=yes ), is a country whose mainland is located on the Iberian Peninsula of Southwestern Europe, and whose territory also includes the Atlantic archipelagos of ...