Business and Economics
COUNTRYAAH, Portugal has since the revolution of 1974 and
decolonization developed from a poor fishing and
agricultural country with large labor emigration to a modern
economy dominated by the service sector where tourism is an
The country had a stable economic growth from the EC
accession in 1986 to the beginning of the 1990s when the
country suffered a budget crisis. During this period, the
country received extensive regional support from the EU's
structural funds and the country also undertook extensive
(re) privatization of business.
In 2001, Portugal had a budget deficit that exceeded the
EU's convergence criteriaof 3 percent and the country's
economy deteriorated rapidly. The main reasons for the
economic decline were that foreign investment decreased as a
result of tougher competition from new low-wage countries in
Eastern Europe and Asia, as well as reduced tax revenues and
rising government costs. Measures such as increased taxes,
cuts in the public sector and the sale of state-owned
enterprises became part of tackling the financial problems.
The budget deficit in 2005 was 6 percent, which was the
highest in EMU. The European Commission postponed Portugal
to 2008 by reducing the budget deficit to the permitted
three percent. This managed the country, but the global
financial crisis in 2008–09 hit the country and in 2011 the
budget deficit was 11 percent. Since then it has decreased
||Change in GDP (%)
||Government debt share of GDP (%)
||Budget deficit's share of GDP (%)
||Unemployment of total workforce (%)
Source: IMF, OECD and World Bank
During the 10th century Portugal made further savings in
the public sector, increased tax revenues and delayed
infrastructure projects. In 2011, the country was granted
emergency loans by the EU, the European Central Bank and the
International Monetary Fund, but the economy is still very
strained. In 2011, the budget deficit fell, but was still
clear on the convergence criteria. In 2014, domestic
consumption increased slightly, while import costs fell as a
result of oil price reductions.
Agriculture, forestry and fishing
About 40 percent of the country's area is arable land),
of which just over 3/4 are fields and the rest are permanent
crops (including olive trees, wine, southern fruits).
Portugal is known for its wines, mainly Madeira and Port
wines, whose grapes are grown on the island of Madeira and
in the upper valley of the Douro River in northern Portugal.
Cereals (wheat, corn and rice), vegetables (other tomatoes)
and potatoes are important crops, but Portugal is far from
self-sufficient in food. The area yield is usually low, due
partly to difficult natural conditions (summer drought and
partly lean soil) and partly to inefficient farming methods,
inappropriate distribution of ownership and lack of capital.
In northern Portugal there are mainly intensively used
small farms (often under 5 ha), while the large estates
dominate in the south (mainly in Alentejo).
After the 1974 revolution, attempts were made to change
agricultural conditions through nationalizations and
cooperative operations, but now some farms have returned to
the previous owners. In recent years, EU aid has sought to
modernize agriculture, mainly through rationalization and
privatization. Livestock management plays a major role
locally, especially in the mountain areas and in the drier
eastern parts of the country.
The importance of forestry is increasing. About 38 per
cent of the country's area is covered by forest, and the
proportion is expected to increase by converting further
arable land into forest. In the south, cork oak grows, and
Portugal accounts for about half the world production of
natural cork. Other things include stone oak and pine, and
fast-growing eucalyptus is grown on ever larger areas. The
wood is to a large extent pulpwood. During the early 2000s,
the country has been hit by several severe forest fires.
Portugal has one of the EU's major fishing fleets.
However, the importance of fishing has diminished. But with
EU support, the industry is undergoing restructuring; Among
other things, renewal of the fishing fleet should allow for
rational deep-sea fishing, which will increasingly
complement coastal fishing. Cod, mackerel and tuna are
caught, but about 30 percent of the landed catch is
sardines, which are also exported. However, Portugal is a
major net importer of fish. There are many fishing ports,
such as Matosinhos, Nazaré, Peniche and Setúbal on the west
coast as well as Portimão and Olhão on the Algarve coast.
Portugal has significant assets on several important
minerals and metals thanks to the Iberian Pyrite belt
running south-east from Lisbon. Portugal is one of the
world's leading producers of lithium, tin and tungsten.
Copper, silver, zinc, lithium, pyrite and barite are also
extracted in significant quantities. Economically important
industrial minerals are rock salt, marble and other building
The mining industry accounts for about 1 percent of the
country's GDP. Minerals and metals make up more than a tenth
of the export value and the country is a net exporter in
Portugal lacks oil and natural gas resources and lacks
nuclear energy. In 1997, a pipeline for natural gas was
opened from Algeria (via Morocco and Spain) to Portugal to
secure energy supply, which was then largely based on fossil
fuel imports. Among these, oil dominates.
In the early 2000s, a changeover to renewable energy
production, especially wind energy, began. After the
installation of new wind turbines and combined wind and
water power plants, in 2010 more than 50 percent of the
electricity was produced from renewable sources. In northern
Portugal, there is good access to water energy, some of
which is expanded. However, the energy source is uncertain
as it requires good access to rainwater; in 2009, it
accounted for about 15 percent of the country's electricity
generation. In 2004, the Alqueva dam began to produce
continuous hydroelectric power and shortly thereafter
constituted the largest artificial lake in Western Europe,
which is also used for irrigation.
Other renewable energy sources cover a smaller part of
the energy demand, and among these, biofuels dominate. In
2007, the world's first commercial wave power plant was
installed outside Porto, but it was closed after two months.
In the Azores, geothermal energy supply is significant.
Of the total energy use, industry, transport and other
consumption account for 1/3 each.
Portugal's conversion to industrialized countries began
fairly late. Light industry dominates with the textile and
food industry as traditionally the largest industries, but
there is also some chemical industry and engineering
industry. However, most companies are small and often lack
modern equipment. Important products include fish and
vegetable preserves. Also important is the production of
olive oil and wines.
The industry is located mainly in the Lisbon and Porto
metropolitan regions. The steel and shipbuilding industry is
in the Lisbon area, which, like Porto and Sines, also has an
oil refinery and petrochemical industry. Sines has developed
into a center for the chemical industry. In the southern
parts of the country, the production of cork products is
During the 1990s, major investments were made in the
automotive industry, but after 2000, profitability in the
industry was poor and a large part of the industry was
The trade balance has been negative for many years. The
large export deficits are largely offset by tourist income
and by transfers from Portuguese guest workers abroad.
Furthermore, Portugal has significant contributions from the
EU. More than 70 per cent of foreign trade takes place with
other EU countries, mainly Spain, Germany and France.
Imports include agricultural products, chemical products and
vehicles. Exports consist of agricultural products, food and
Tourism and gastronomy
Tourism is of great importance to the country's economy;
the industry contributes about 15 per cent of both GDP and
export revenue and every six Portuguese for their income
from the industry. In 2013, the country was visited by 8.1
million visitors; of these, Spaniards dominate, followed by
British, French and Germans. The main destinations are
Lisbon, Madeira and the Algarve coast.
The capital attracts with a beautiful location, old
cityscape and historical monuments, museums etc. Nearby are
bathing and holiday resorts such as Estoril and Cascais.
Bath tourism is mainly concentrated on the Algarve coast in
the south with resorts such as Albufeira and Lagos, but
bathing opportunities are good even along most of the west
coast, for example. at Ericeira, Nazaré, Figueira da Foz and
the historically important Viana do Castelo in the north.
Porto also attracts tourists, as well as the vineyard
district of Douro's valley. In the hinterland there are
several historically interesting and worthwhile places, e.g.
the old university town of Coimbra, the residential towns of
Évora and Bragança and the ruins of Conimbriga. Religious
gathering points are the national shrine of Batalha and the
pilgrimage site of Fátima.
Portuguese cuisine is characterized by a versatility in
flavoring and by sometimes surprising flavors. Four
ingredients dominate: cabbage, rice and potatoes, and salted
and dried cod (bacalhau). As a spice, garlic,
coriander, curry, lemon and mint dominate. Soups are eaten
for both everyday and party. From northern Portugal comes
the soup caldo verde with olive oil, garlic,
potatoes, a few pieces of garlic sausage and finely shredded
kale. Its popularity can be measured by açordas,
where old bread is mixed with meat, fish or vegetables in
different regional combinations. On the meat side, pork
dominates closely followed by chicken. Rojões comino
is diced pork cooked with cumin, coriander and lemon while
canjais chicken broth with lemon, mint, almonds,
pork and mayonnaise. However, seafood plays the leading role
in the diet and the recipe flora is huge, e.g. sardinhas
assadas (roasted sardines), lampreia (stew on
neon eyes), caldeirada (fish soup), bolinhos de
bacalhau (cod cakes flavored with parsley, mint and
coriander) and seafood cooked in cataplana (a
mussel-shaped metal stew). In the desserts, the ingredients
dominate egg yolks, sugar and almonds eg. in the cake
toucinho do céu. Everywhere the wedding
pudding pudim flan is also served.