After a five-year crisis, Portugal’s economic resurgence was confirmed in 2017 and the country is enjoying positive progress. GDP growth has gone from 1.4% in 2016 to 2.7% in 2017. Unemployment, which at the height of the crisis affected almost 20% of the active population, fell to just 9.9% in 2017. Investors are coming back and these are mainly from Europe. Start-ups are flourishing, having been made to feel particularly welcome by the infrastructure put in place for them by the City of Lisbon.
The country emerged from its troubles thanks to international finance and the implementation of drastic reforms which, although painful for the population, are now bearing fruit. Those reforms were accompanied by a number of incentives, particularly on the tax front, for international companies planning to set up premises in the country. Another decisive element is that tourists are flocking back to Portugal again. The surge in tourism has really boosted this turnaround. The tourism sector generated €8.8 billion in revenue in 2016 (up 12.7% on 2015). It is set to soon employ around 23% of the active population.
The service sector dominates the Portuguese economy, representing 75.4% of GDP, whereas industry (including the construction, water and energy sectors) accounts for 22.4% of GDP and the primary sector (agriculture, forestry and fishing) just 2.2%. Industry is modernising and seeing new sectors appear with a strong technology element, such as: automotive and componentry, electronics, energy, pharmaceutical products and industries linked to information technology and communication (ITC). There are certain sectors where Portugal really shines. For example, it is one of the top 5 European Union producers of energy from renewable sources; it is one of the world’s leading producers of moulds for plastics processing, and the technology and quality of the Portuguese paper industry are recognised internationally.
International trade on the rise
International trade has risen sharply (+6% in 2017) and the proportion of exports in GDP (40% in 2016) is improving. Three quarters of Portugal’s trade takes place within the European Union. Portugal’s biggest customers are: Spain, France, Germany, the United Kingdom and the United States. Its main suppliers are: Spain, Germany, France, Italy and the Netherlands. France is a favoured partner; French exports to Portugal have increased dramatically since 2013. The balance of trade is in France’s favour, apart from in the service sector. Portugal is on the up: in 2016 it became France’s 17th biggest customer (up 3 places on 2015) and its 15th biggest supplier (up 4 places). It has over 600 French-held companies on its soil, representing 12% of all international companies, 30% of which have been present for more than twenty years. The main investment sectors are: NICTs (New Information & Communication Technologies), transport & logistics, construction & property and industry & commerce.