Portugal: Economic and Political Outline

Economic Overview

From the beginning of 2009, Portugal has been suffering from deep recession, caused by the collapse of foreign demand and the restrictive financial conditions that have affected all the sectors of the economy, such as exports and investments in particular.  After it contracted by 2.7% in 2009, the Portuguese economy again experienced a moderate growth in 2010, which then again became negative in 2011. The GDP growth should again be negative in 2012 (-3% according to the IMF estimate), as a result of the austerity measures and an unfavorable international economic situation.

In May 2011, Portugal signed a 78 billion EUR bailout agreement with the Troika (EU-ECB-IMF), in order to reduce its budget deficit. Under this agreement, the government launched a plan of reforms and structural adjustments, including budget cuts, tax increases, a large privatization program expected to earn the country 7 billion EUR, a bank recapitalization plan, and a reform of the labor market. The second program review conducted in December by the IMF indicates progress in implementing reforms; however, the review concludes that the main danger is external, linked to the ongoing crisis in the eurozone.

With an unemployment rate rising to approximately 10%, an increase in social inequality between the north and the south, and the weakening of purchasing power, social tensions have been more keenly felt.

Main Sectors of Industry

The agricultural sector, with low productivity due to low level of mechanization,  represents a little over 2% of Portugal's GDP and employs 11.5% of the population. The main crops are cereals, fruits, vegetables and wine. The exports of  Port wine represent 1.4% of total exports. Portugal has many natural resources. The mining sector (copper, tin) represents 6% of the GDP and Portugal is one of the main exporters of marble. The forests provide a large portion of the world's cork supply.

The manufacturing industry is modern and it is made up of small and medium-sized companies. Its main sectors of activity are metallurgy, mechanical engineering, textiles and construction. Moreover, the country has increased its role in the European automobile sector and has a world class mold manufacturing industry.

Services, particularly tourism, play an important role which is increasing rapidly. The tertiary sector contributes to more than 70% of the GDP.

Source: World Bank - Last Available Data.

Indicator of Economic Freedom

Score:

64.0/100

Position:

Moderately free

World Rank:

65/179

Regional Rank:

32/42

Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation

Note: The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Sources of General Economic Information

Ministries

Prime Minister
Ministry of Agriculture (MADRP)
Ministry of the Economy (ME)
Ministry of Foreign Affairs (MNE)
Business development agency (AICEP)
Ministry of Finance (Inland Revenue)

Statistical Office

I.N.E. Statistics Portugal

Central Bank

Banco de Portugal

Stock Exchange

Bolsa Valores Lisboa/Euronext

Other Useful Resources

Comissão de Mercado de Valores Mobiliários

Main Online Newspapers

Expresso
Jornal de Negócios
Vida Económica
Diario de Notícias
Público

Economic Portals

Eu sou economista
ISCTE-Inst. Sup. Ciencias Trabalho e Empresa
Portal da empresa
Portal Sites

Political Outline

Type of State

Official name: the Portuguese Republic.
Portugal is a republic based on a parliamentary democracy. The constitution establishes a "semi-presidential" regime for the country.

Executive Power

The President is the Head of State. He is elected by universal suffrage for a five year term and is the Commander-in-chief of the Army. After a general election, the leader of the majority party or coalition is usually appointed to be Prime Minister by the President, for a four year term. The Prime Minister is the head of the government, and he holds the executive power, which includes implementing laws and overseeing the everyday running of the country. The Council of Ministers is appointed by the President on the recommendation of the Prime Minister. There is also a Council of State, which acts as an advisory body to the President.

Legislative Power

Portuguese legislative power is unicameral. The parliament, called the Assembly of the Republic, has 230 seats. The members are elected by universal suffrage for a four year term and the executive branch of government is directly or indirectly dependent on the support of parliament often expressed by a vote of confidence. The Prime Minister cannot dissolve the Assembly, but the President can do so and call for an early election if he so wishes. Portuguese citizens enjoy considerable political rights.

Main Political Parties

Political life in Portugal is mainly dominated by two parties: the PS (Socialist Party) and the PSD (Social Democratic Party). Other parties active in the country are:
- The PP (Popular Party) – Christian democrats,
- The PCP (Portuguese Communist Party) – left-wing party,
- Bloco de Esquerda (Left-wing block) - Association of parties left of the Communist party

Current Political Leaders

President : Anibal CAVACO Silva (since March 2006) - PSD
Prime Minister: Jose SOCRATES (since March 2005) - PS

Next Election Dates

Presidential elections: January 2016

Indicator of Freedom of the Press

World Rank:

33/179

Evolution:

7 places up compared to 2010

Source: Worldwide Press Freedom Index 2011, Reporters Without Borders

Note: The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position is assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).