The economy of Portugal is the 44th largest in the world, with a Gross Domestic Product (GDP) of $252 billion according to 2020 estimates. The country has experienced strong economic growth since transitioning to a market-based economy in 1986, and is now considered one of the most developed countries in Southern Europe.
The services sector accounts for around two-thirds of Portugal’s GDP, with the largest contributors being tourism, transportation and telecommunications. The manufacturing sector is also an important contributor to the economy, producing items such as textiles, footwear and electronics for both domestic consumption and export. Additionally, agriculture plays an important role within Portugal’s economy with crops such as olives and grapes being exported around the world.
According to cheeroutdoor, Portugal has benefited from strong foreign investment over recent years which has enabled it to develop its infrastructure such as roads and ports which have created employment opportunities for many people throughout the country. This investment has also enabled Portugal to become an attractive destination for tourists from around the world thanks to its rich cultural attractions such as historical sites and religious festivals as well as natural attractions such as beaches, mountains and rivers which attract visitors from all over.
Remittances from Portuguese citizens living abroad have also provided an important source of income for many families within Portugal; it is estimated that these remittances account for up to 3% of total GDP. In addition to this, Portugal has benefited significantly from EU funding which has enabled it to develop its infrastructure further while also providing valuable support in areas such as health care, education and transport links between different regions throughout the country.
Overall, while there have been significant improvements made to many aspects of life within Portugal due to economic growth there are still challenges that need addressing if sustainable development is going to be achieved such as reducing poverty levels particularly among rural populations and improving access to infrastructure so that citizens can benefit from these economic gains too.
Business and Economics
Abbreviated as PRT by abbreviationfinder.org, 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 important part.
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 somewhat.
|Year||Change in GDP (%)||Government debt share of GDP (%)||Budget deficit’s share of GDP (%)||Inflation, CPI||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 blocks.
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 this industry.
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 important.
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 discontinued.
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 percent 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 wine.
- COUNTRYAAH: Find major trading partners of Portugal, including major exports and major imports with latest trade value and market share as well as growth rate.
Tourism and gastronomy
Tourism is of great importance to the country’s economy; the industry contributes about 15 percent 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.
Note: the capital city of Portugal is Lisbon with a population of 2.9 million (estimate 2019). Other major cities include Vila Nova de Gaia, Porto, Brag, Amadora, Guimarães, Coimbra.
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.