Portugal joined the European Union in 1986 and started a process of modernization within the framework of a stable environment. It has achieved a healthy level of growth. Successive governments have implemented reforms and privatized many state-controlled firms and liberalized key areas of the economy. Portugal was one of the founding countries of the euro in 1999, and therefore is integrated into the Eurozone.
Major industries include oil refineries, automotive, cement production, pulp and paper industry, textile, footwear, furniture and cork (of which Portugal is the world’s leading producer). Agriculture and fishing no longer represents the bulk of the economy, but Portuguese wines, namely Port Wine (named after the country’s second largest city, Porto) and Madeira Wine (named after Madeira Island), are exported worldwide. Tourism is also important, especially in mainland Portugal’s southernmost region of the Algarve and in the Atlantic Madeira archipelago.
The Global Competitiveness Report for 2005, published by the World Economic Forum, places Portugal on the 22nd position, ahead of countries such as Spain, Ireland, France, Belgium and Hong Kong. This represents an increase of two places from the 2004 ranking. Portugal was ranked 20th on the Technology index and 15th on the Public Institutions index.
Research about standard of living by the Economist Intelligence Unit’s (EIU) Quality-of-life Survey places Portugal as the country with the 19th-best quality of life in the world, ahead of other economically and technologically advanced countries like France, Germany, the United Kingdom and South Korea.
Caixa Geral de Depósitos, EDP, Galp, Millennium bcp, Portugal Telecom and Sonae are among the largest corporations of Portugal by both number of employees and net income.
The major stock exchange is the Euronext Lisbon which is part of the NYSE Euronext, the first global stock exchange. The PSI-20 is Portugal’s most selective and widely known stock index.
Economy – overview
Portugal has become a diversified and increasingly service-based economy since joining the European Community in 1986. Over the past two decades, successive governments have privatised many state-controlled firms and liberalised key areas of the economy, including the financial and telecommunications sectors. The country qualified for the European Monetary Union (EMU) in 1998 and began circulating the euro on 1 January 2002 along with 11 other EU member economies. Economic growth had been above the EU average for much of the 1990s, but fell back in 2001-06. GDP per capita stands at roughly two-thirds of the EU-25 average. A poor educational system, in particular, has been an obstacle to greater productivity and growth. Portugal has been increasingly overshadowed by lower-cost producers in Central Europe and Asia as a target for foreign direct investment. The budget deficit surged to an all-time high of 6% of GDP in 2005 but was reduced to 4.6% in 2006. The government faces tough choices in its attempts to boost Portugal’s economic competitiveness while keeping the budget deficit within the eurozone’s 3%-of-GDP ceiling.
GDP (purchasing power parity)
$210.1 billion (2006 est.)
GDP (official exchange rate)
$176.8 billion (2006 est.)
GDP – real growth rate
1.3% (2006 est.)
GDP – per capita (PPP)
$19,800 (2006 est.)