Economy of Portugal
|Economy of Portugal|
|Rank||42nd (nominal) / 49th (PPP)|
|Currency||1 Euro = 100 eurocent|
|Fiscal year||Calendar year|
|Trade organisations||EU, WTO and OECD|
|GDP||$245 billion (2012 est.)|
|GDP growth||-3% (2012 est.)|
|GDP per capita||$23,000 (2012 est.)|
|GDP by sector||agriculture: 2.6%; industry: 22.6%; services: 74.8% (2012 est.)|
|Inflation (CPI)||2.9% (2012 est.)|
below poverty line
|Gini coefficient||38.5 (2007)|
|Labour force||5.48 million (2012 est.)|
|agriculture: 11.7%; industry: 28.5%; services: 59.8% (2009 est.)|
|Unemployment||17.5% (February 2013)|
|Average gross salary||€894/$1,300, monthly (2010)|
|Main industries||textiles, clothing, footwear, wood and cork, paper, chemicals, auto-parts manufacturing, base metals, dairy products, wine and other foods, porcelain and ceramics, glassware, technology, telecommunications; ship construction and refurbishment; tourism|
|Ease of doing business rank||30th (2013)|
|Exports||$84.283 billion (2012)|
|Export goods||agricultural products, food products, oil products, chemical products, plastics and rubber, skins and leather, wood and cork, wood pulp and paper, textile materials, clothing, footwear, minerals and mineral products, base metals, machinery and tools, vehicles and other transport material, optical and precision instruments|
|Main export partners|| Spain 22.7%
United Kingdom 5.3%
Netherlands 4.2% (2012 est.)
|Imports||$84.133 billion (2012)|
|Import goods||agricultural products, food products, oil products, chemical products, plastics and rubber, skins and leather, wood and cork, wood pulp and paper, textile materials, clothing, footwear, minerals and mineral products, base metals, machinery and tools, vehicles and other transport material, optical and precision instruments, computer accessories and parts, semi-conductors and related devices, household goods, passenger cars new and used, wine products|
|Main import partners|| Spain 32.0%
Netherlands 4.9% (2012 est.)
|FDI stock||$128.2 billion (31 December 2012 est.)|
|Gross external debt||$497.8 billion (30 June 2010) 210% of GDP|
|Public debt||124.1% of GDP (2012)|
|Expenses||$107.4 billion (2012 est.)|
|Economic aid||donor: ODA, $0.51 billion (2009)|
|Foreign reserves||US$21,832 billion (February 2013)|
The Economy of Portugal is of a mixed nature and functions in support of a high income country. The Global Competitiveness Report 2012-2013 edition placed Portugal in the 49th position out of 144 countries and territories.
Most imports come from the European Union (EU) countries of Spain, Germany, France, Italy, and the United Kingdom, while most exports also involve other EU member states. The Portuguese currency is the euro (€) and the country has been a part of the Eurozone since its inception. Portugal's central bank is the Banco de Portugal, which forms part of the European System of Central Banks, and the major stock exchange is the Euronext Lisbon, which belongs to the NYSE Euronext, the first global stock exchange.
Despite the gradual modernization and relative expansion of the Portuguese educational system since the 1960s, it remained underdeveloped until the 2000s when it achieved recognition for its world-standard practices and trends. However, Portugal has been increasingly targeted by lower-cost producers in Central Europe and Asia for the purpose of foreign direct investment. Such long-term problems have hindered a significant amount of economic growth in Portugal.
The Financial Crisis of 2008 continues to severely affect the Portuguese economy and it shrank for the third consecutive year in 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. Nonetheless, the government faces tough choices in regard to its attempts to stimulate the economy while it also seeks to maintain its public deficit around the EU average. In April 2011, following the decisions of Greece and the Republic of Ireland, Portugal confirmed a financial bailout from the European Union that was worth €78 billion. Predictions stated that the Portuguese economy will not significantly recover until 2014.
Portugal is home to a number of notable leading companies with worldwide reputations, such as Grupo Portucel Soporcel, a major world player in the international paper market; Sonae Indústria, the largest producer of wood-based panels in the world; Corticeira Amorim, the world leader in cork production; and Conservas Ramirez, the oldest operational canned fish producer.
- 1 History
- 2 Employment and wages
- 3 Economy by sector
- 4 Financial market
- 5 Competitiveness
- 6 Domestic problems
- 7 Education, training and research in business and economic sciences
- 8 See also
- 9 References
- 10 External links
Portuguese Colonial Empire
During the Portuguese Empire period, started in the 15th century, until the Carnation Revolution of 1974, the economy of Portugal was centered in trade and raw materials related activities within its vast colonial possessions, mainly in Asia (spices, silk, dyes, porcelain and gems), Africa (ivory, timber, oil and diamonds) and South America (sugar cane, dyes, 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 became an independent country, however, until 1974, Portugal managed to preserve its colonies/overseas territories in Africa, which included Angola and Mozambique, territories that would experience reasonable rates of economic growth until the departure of the Portuguese in 1975.
After a long period of economic divergence before 1914, the Portuguese economy recovered slightly until 1950, entering thereafter on a path of strong economic convergence. Economically, most of the Salazar years (1933–1968) were marked by a period of modest growth and the country remained largely underdeveloped and its population relatively poor and with low education levels well into until the 1960s. Portuguese economic growth in the period 1960–1973 created an opportunity for real integration with the developed economies of Western Europe. Through emigration, trade, tourism and foreign investment, individuals and firms changed their patterns of production and consumption, bringing about a structural transformation. Simultaneously, the increasing complexity of a growing economy raised new technical and organizational challenges, stimulating the formation of modern professional and management teams.
The economy of Portugal and its overseas territories on the eve of the Carnation Revolution (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 and consumption expenditure for durable and nondurable consumer goods. The Estado Novo regime economic policy encouraged and created conditions for the formation of large business conglomerates.
The regime maintained a policy of corporatism that resulted in the placement of a big part of the Portuguese economy in the hands of a number of strong conglomerates, including those founded by the families of António Champalimaud (Banco Totta & Açores, Banco Pinto & Sotto Mayor, Secil, Cimpor), José Manuel de Mello (CUF – Companhia União Fabril), Américo Amorim (Corticeira Amorim) and the dos Santos family (Jerónimo Martins). Those Portuguese conglomerates had a business model with similarities to South Korean chaebols and Japanese keiretsus and zaibatsus.
The Companhia União Fabril (CUF) was one of the largest and most diversified Portuguese conglomerates with its core businesses (cement, chemicals, petrochemicals, agrochemicals, textiles, beer, beverages, metallurgy, naval engineering, electrical engineering, insurance, banking, paper, tourism, mining, etc.) and corporate headquarters located in mainland Portugal, but also with branches, plants and several developing business projects all around the Portuguese Empire, especially in the Portuguese territores of Angola and Mozambique.
Other medium sized family companies specialized in textiles (for instance those located in the city of Covilhã and the northwest), ceramics, porcelain, glass and crystal (like those of Alcobaça, Caldas da Raínha and Marinha Grande), engineered wood (like SONAE near Porto), canned fish (like those of Algarve and the northwest), fishing, food and beverage producing, tourism (well established in Estoril/Cascais/Sintra and growing as an international attraction in the Algarve since the 1960s) and in agriculture (like the ones scattered around the Alentejo – 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 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 (1961–1974), a counterinsurgency war against independentist guerrilla and terrorism, the overseas territories of Angola and Mozambique (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 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.
The military coup of 1974
The post Carnation Revolution 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 territories 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'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 (7.8 percent).
In 1960, 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.
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, 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, achieved in 1986, contributed to stable economic growth and development, largely through increased trade ties and an inflow of funds allocated by the European Union (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 2011 marked by irrational and unsustainable State employment, from 1988 to 1993, during the government cabinets led by then Prime Minister Aníbal Cavaco Silva, 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 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 rates, and low unemployment. The country qualified for the Economic and Monetary Union of the European Union (EMU) in 1998 and joined with 10 other European countries in launching the euro 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. Portugal's inflation rate for 1999, 2.4%, was comfortably low.
Household debt expanded rapidly. The European Commission, OECD, 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, Greece, Malta and Slovenia overtook Portugal in terms of GDP per head. Portuguese GDP per head 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 which described Portugal as "a new sick man of Europe".
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 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.
However, the Portuguese subsidiaries of large multinational companies ranked among the most productive in the world, including Siemens Portugal, Volkswagen Autoeuropa, Qimonda Portugal (before the parent company filed for bankruptcy), IKEA, Nestlé Portugal, Microsoft Portugal, Unilever/Jerónimo Martins and Danone Portugal. Many Portuguese companies have grown and expanded internationally since after 1986. Among the most notable Portugal-based global companies are SONAE, Amorim, Sogrape, EFACEC, Portugal Telecom, Jerónimo Martins, Cimpor, Unicer, Millennium bcp, Lactogal, Sumol + Compal, Delta Cafés, Derovo, Critical Software, Galp Energia, EDP, Grupo José de Mello, Sovena Group, Valouro, Renova, Teixeira Duarte, Soares da Costa, Portucel Soporcel, Simoldes, Iberomoldes and Logoplaste.
- 1979 372,086
- 1983 435,795
- 1986 464,321
- 1988 485,368
- 1991 509,732
- 1996 639,044(++)
- 1999 716,418
- 2005 747,880
++ – including the Autonomous Region of Madeira
Portuguese financial crisis (2010-onwards)
As of May 2013, the Portuguese Financial crisis is a major political and economic crisis in Portugal that started during the initial weeks of 2010. It is the Portuguese economy's most severe recession since the 1970s.
A report published in January 2011 by the Diário de Notícias, a leading Portuguese newspaper, demonstrated that during the period of the Carnation Revolution, from 1974 to 2010, the democratic Portuguese Republic governments 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, inflated top management and head officers' bonuses and wages. Additionally, a recruitment policy eventuated that has boosted the number of redundant public servants.[dead link]
For almost four decades, the nation's economy has also been damaged by risky credit, public debt creation, and mismanaged European structural and cohesion funds. Apparently, Prime Minister Sócrates'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.
In April 2011, Portugal confirmed the receipt of a financial bailout from the IMF and the European Union worth €80 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.
The year 2013 is the final period of the three-year EU aid program and it is anticipated that the conclusion of the EU's support package, worth €78 billion, will leave Portugal with a €12 billion funding gap in 2014.
Employment and wages
As of February 2013, the unemployment rate is at 17.6%. The number of unemployed people has increased consistently since 2000 and is estimated to be at around 1 million.
As of May 2006, over 420,000 people were unemployed in Portugal. The unemployment rate in the country was 7.7%. In 2007 the unemployment rate reached 8.4%, the highest unemployment rate in Portugal since 1987. The average European Union unemployment rate decreased to a record low of 7.3% in 2007. In the Portuguese sub-region of Vale do Ave, the unemployment rate has reached 15%, and in the Península de Setúbal sub-region 12.5%.
Officially, in 2008 the unemployment decreased to 7.3% in the second quarter of 2008. However, it immediately rose again to higher rates. By December 2009, unemployment had surpassed the 10% mark nationwide.
Although being both a developed country and a high income country, Portugal has the lowest GDP per capita in Western Europe and its population has one of the lowest incomes per head among member states of the European Union. According to the Eurostat it had the 6th lowest purchasing power among the 27 member states of the European Union for the period 2005–2007.
Maria da Conceição Cerdeira, one of the authors of a published research study made by the Technical University of Lisbon's ISEG (Instituto Superior de Economia e Gestão), 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.
The first quarter of 2013 signified a new unemployment rate record for Portugal, as it reached 17.7 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.
In 2008, about 8 per cent 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).
Nearly 100,000 (60,000 in 2008) people with an academic degree are unemployed in Portugal and this group includes a large proportion of young adults.
As of February 2013, the graduate unemployment rate is over 35 per cent, while the number of unemployed workers from the manufacturing, construction and energy sectors, among others, rose by 3.6 per cent in the first quarter of 2013.
Economy by sector
Fisheries and agriculture now account for about 4% of the GDP, down from approximately 25% in 1960, while still employing 11.4% of the labour force. On the other hand, the tertiary sector has grown, producing 66% of the GDP and providing jobs for 52% of the working population. The remaining 30% of the GDP is mainly produced by the building and energy sectors.
Natural resources such as forests cover about 34% of the country, namely pine trees (13,500 km2), Cork Oak (6800 km2), Holm Oak (5,340 km2), and Eucalyptus (2,430 km2). Cork is a major production, Portugal produces half of the world's cork. Significant mining resources are lithium, tungsten, tin, and uranium.
Agriculture and fisheries
A considerable part of continental Portugal is dedicated to agriculture, although it does not represent most of the economy. The south has developed an extensive monoculture of cereals and olive trees and the Douro Valley in vineyards. 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 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, Vinho Verde and Madeira Wine are the leading wine exporters. Portugal is also a quality producer of fruits, namely the Algarve oranges, cherries (large production in Cova da Beira and Alto Alentejo), and Oeste region's pêra rocha (a type of pear). Other exports include horticulture and floriculture products, beet sugar, sunflower oil, cork, and tobacco.
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 GRT), 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 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.
The coastal fishing fleet accounted for only 13% of vessels but had the largest GRT (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.
The major industries include: oil refineries, petrochemistry, cement production, automotive and ship industries, electrical and electronics industries, machinery, pulp and paper industry, injection moulding, plastic products, textile, footwear, leather, furniture, ceramics, beverages and food industry and cork (leader producer). Automotive and other mechanical industries are primarily located in and around Setúbal, Porto, Lisbon, Aveiro, Braga, and Santarém.
Coimbra and Oeiras have growing technological-based industries, including pharmaceuticals and software. Sines is a major petrochemical centre. Maia has one of the largest industrial parks of the country, including noted wood processing and food industries. Figueira da Foz is a major centre of pulp and paper industry. Marinha Grande is the most reputed glass making centre of Portugal. Leiria, Oliveira de Azeméis, Vale de Cambra and Viseu, have important light industries, including injection moulding and plastics.
Modern non-traditional technology-based industries like aerospace, biotechnology and information technology, have been developed in several locations across the country. Alverca, Covilhã, Évora, and Ponte de Sor are the main centres of Portuguese aerospace industry, which is led by Brazil-based company Embraer and the Portuguese company OGMA. 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, Porto, Braga, Coimbra and Aveiro.
The tertiary sector has grown, producing 66% of the GDP and providing jobs for 52% 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 have benefited from privatisation, also gaining in terms of efficiency. Tourism in Portugal has developed significantly and generates approximately 5% of the wealth produced in Portugal.
In the Portuguese financial market, the major stock exchange is the Euronext Lisbon which is part of the NYSE Euronext, the first global stock exchange. It is supervised and regulated by the Portuguese Securities Market Commission. The PSI-20 is Portugal's most selective and widely known stock index. Portugal's central bank is the Banco de Portugal, which is an integral part of the European System of Central Banks. The largest Portuguese banks are Banco Comercial Português and the state-owned Caixa Geral de Depósitos.
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 (EU) countries in terms of efficiency, profitability, and asset quality, with solvency 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 risks, 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.
Portugal's competitiveness in the world
The Global Competitiveness Report for 2005, published by the World Economic Forum, placed Portugal on the 22nd position, ahead of countries and territories like Spain, Republic of Ireland, France, Belgium and Hong Kong. This table showed that Portugal had stepped two places regarding the 2004 ranking. On the Technology index, Portugal was ranked 20th, on the Public Institutions index Portugal was the 15th best and on the Macroeconomic index, Portugal was placed on the 37th position.
The Global Competitiveness Index 2007–2008 placed Portugal on the 40th position out of 131 countries and territories. and in the 2008–2009 edition, it went even further down as Portugal was placed as the 43rd out of 134 countries and territories.
Competitiveness by city
A study concerning competitiveness of the 18 Portuguese district capitals, complying with World Economic Forum methodology, was made by Minho University economics researchers. It was published in Público newspaper on 30 September 2006. The best-ranked cities in the study were Évora, Lisbon and Coimbra.,
- Évora: 7,293
- Lisbon: 6,454
- Coimbra: 6,042
- Beja: 5,660
- Leiria: 5,609
- Castelo Branco: 5,608
- Aveiro: 5,452
- Guarda: 5,178
- Santarém: 5,037
- Portalegre: 4,711
- Viseu: 4,628
- Vila Real: 5,514
- Bragança: 4,271
- Setúbal: 4,070
- Braga: 4,055
- Faro: 3,971
- Viana do Castelo: 3,859
- Porto: 3,577
- 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 is destroyed. This has an important impact on the economy because many people and industries depend on forestry 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 130% of GDP on 2013 figures. This problem is a threat to the Portuguese economy and the State's financial sustainability.
- 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 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 of countries published by Transparency International, 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 several higher education institutions awarding academic degrees in economics and business management across the whole country. Almost every polytechnical institute have programmes in management and administration. All state-run universities have programmes in economics. Among the largest and most reputed universities which host an economics department and develop research on economics, are the Technical University of Lisbon (through its Instituto Superior de Economia e Gestão – ISEG), ISCTE – Lisbon University Institute, the Portuguese Catholic University at Lisbon (through its Faculdade de Ciências Económicas e Empresariais – FCEE), the University of Porto (through its Faculdade de Economia da Universidade do Porto – FEP); the New University of Lisbon (through its Nova School of Business and Economics – NOVASBE); the Minho University (through its Escola de Economia e Gestão – EEG); and the University of Coimbra (through its Faculdade de Economia da Universidade de Coimbra – FEUC).
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. Both the Bank of Portugal and Statistics Portugal develop lengthy and thoroughly systematic research and make reports on the Portuguese economy.
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