EACC Insights: Country Spotlight: Portugal

Brief Description of Country:

Portugal is one of the oldest countries in the world and was firstly recognized as an independent kingdom in 1143. It is has a prime geostrategic location between Europe, Americas and Africa, on the southern west coast of Europe, inside the Iberian Peninsula. It borders with Spain on the north and east, and with the Atlantic Ocean in the west and south.

Besides the continental part in Europe, the Portuguese territory also incorporates the archipelagos of Madeira and Azores, located in the Atlantic Ocean.

Portugal, with an average of more than 300 days of sun per year and temperature that rarely goes below the 10ºC, has one of the pleasant climates in Europe. It has a population of 10.3millions, from which around 50% is considered active.

The official language is Portuguese, and it is one of the most spoken languages with more than 250Million speakers spread worldwide over almost all the continents: Africa, Europe, America and Asia.

EU Member? Date of Membership:

Portugal formally joined the EEC, which later became the European Union, in the 1st of January 1986. Since its inception, 1st January 1999, Portugal adopted the “Euro” currency (as a virtual currency), which became physically circulating in 2002.

Economic Growth Forecast:

The Portuguese economy experienced a noteworthy turnaround in 2017, with full-year GDP growth soaring to a 17-year high of 2.7%. And according to the OECD economic outlook, Portugal GDP growth is projected to remain above 2% in 2018 and 2019.

The recovery will continue to be supported by past reforms, favorable external trade and domestic demand conditions. Investment activity will be underpinned by an increase in the absorption of EU structural funds in 2018. Consumption growth will remain solid, reflecting strong employment growth. Nevertheless the public debt is still high and poses risks in the weak growth environment

A gradual further reduction in economic slack will prompt a moderate increase in inflation over the coming years. A rise in geopolitical tensions that results in significant and sustained upward pressure on oil prices would adversely impact the Portuguese economy given it is a net oil importer.

Employment:

Portugal currently records 5 178 thousand of active people. In 2017 the amount of people employed was 4.72million, and nearly 500thousand people were unemployed. These numbers represents an unemployment rate of 8.9% in 2017, the lowest value since 2008, and a 2.2 pp decrease from 2016.

Percentage of country with English as a second language:

According to EF English Proficiency Index, a worldwide ranking that assess the English level of countries in which English isn’t the mother tongue, Portugal ranked number 18. Around 70% of the population affirms to know another language rather than Portuguese; and after English, the Spanish and French complete the podium on the foreign languages dominated by Portuguese people. It is estimated that around 33.8% of Portuguese population can hold a conversation in English. Amongst young people, from 18 to 24 years, 91.8% speak English; and if we look into the same age range but only for college degree students then is estimated that 97.4% speak English.

Major industries:

The structure of the Portuguese economy is characterized by a heavy level of the services sector. In 2016, 75.4% of the gross value added came from the services sector and employed 68.6% of the active population. The industry, construction, energy and water represent 22.4% of the Portuguese gross added value, and 24.5% of total employment.

Portuguese industry still mainly relies on most traditional sectors, which includes textiles—especially cottons and woolens (the oldest and most important of Portugal’s manufactures), automotive assembly, electronics, glass, porcelain and pottery, footwear, cement, cellulose and paper, rubber and chemicals, cork and cork products, and food industries (mainly canned fish).

However in the past decade Portugal has witnessed significant changes in the specialization patterns of its industrial activities. Shifting from some of its traditional sectors to technological driven industries, from which is important to highlight the growth on the automotive sector and its components, electronics, energy, pharmaceuticals and industries related with ICT. Also, the startup ecosystem in Portugal has recorded a fast and large growth in the past 6 years.

The tourism sector is of great important for Portugal, and it has been registering a fast growth in the last couple of years. Portugal GDP relies 9% on tourism; the tourism represents 20% of Portuguese exports, and 58% of the exports in the services sector.

View full publication here.