Tag Archive for: economy

Portugal is still a backward country’ – Elisa Ferreira (EU commissioner)

Portugal is about twice as big as the Netherlands and has 10 million inhabitants, of which 2 million live abroad. Last week – on the 5th of October – Republic Day was celebrated, memorizing the overthrow of the monarchy in 1910.

Since the Carnation Revolution in 1974, urbanization has increased at the expense of the countryside, and the coastal region has become more densely populated, younger, and richer. The two metropolitan areas of Lisbon (at the Tagus river) and Porto (at the river Douro) – cover 5% of the territory, half of the population, and more than 50% of the gross domestic product, an important indicator of economic wealth.

The isolated geographical position (‘where the land ends and the sea begins’) and the struggle to escape poverty and overcome the scarcity of natural resources have always been a constant in Portuguese history. It stood at the origin of the Portuguese discoveries in the 15th and 16th centuries and was the cause of successive waves of emigration.

The impossibility of combining national sovereignty with regular trade relations with Spain has pushed the country towards the Atlantic and Britain was Portugal’s main trading partner for centuries. The importance of this relationship dates back to the Treaty of Windsor in 1386.

During the Estado Novo of dictator Salazar and despite the political affinities of the two autocratic regimes, Portugal and Spain kept their backs turned and trade relations between the two countries remained almost non-existent until their entry into the European Union. Nowadays, Spain is the main market for the Portuguese export of goods.

The small size of the economy and the awareness of its economic backwardness in relation to the more developed European countries is a fundamental feature of the Portuguese identity.

As said, things changed in 1986 when Portugal was integrated into the European community. Businesses got access to the latest technologies and global markets and European funds made it possible to catch up with the huge backlog in infrastructure ( i.e. roads) and education.

Paradoxically, progress did not lead to equivalent production growth, and Portuguese workers were long seen as good professionals in tasks that did not require high qualifications (construction, cleaning, clothing industry).

The poor growth and the financial crisis at the beginning of the 21st century lowered the country’s expectations. Many citizens lost confidence in the country’s ability to change and innovate. This loss in confidence was one of the reasons why nearly half a million Portuguese emigrated between 2010 and 2020. It also reflects the giving up of many Portuguese to change their country.

Progress was also not able to solve one of the biggest problems in society: the high incidence of poverty among the young and the elderly. Portugal is one of the most unequal countries in the EU. Being born into an economically and socially disadvantaged family is practically a condemnation and hard to tackle in a low-growth economy.

Demographic projections point to an accelerated aging and ‘shrinking’ of the population. An older population tends to be more resistant to change and innovation, which can be an obstacle to productivity growth. More innovation and investment in workers’ skills will be essential to offset the negative effects of population decline and aging.

Over the past decades, the Portuguese have accumulated one of the highest debts in the EU as a percentage of GDP. The rise in debt has coincided with a fall in savings which became one the lowest in the EU. High debt and low savings make households more vulnerable to shocks, such as the debt crisis in 2011 or the Covid-19 pandemic.

The country has definitely undergone profound economic and social changes but as long as the most qualified young people emigrate, Portugal will continue to live below its means. This is not just a failure of the economy but also of the Portuguese democracy.

Enjoy the week                               Aproveite a semana

‘Look for the persons who benefit and you will know’ – Lenin

The four biggest economies in the Eurozone – Germany, France, Italy, and Spain – together represent two-thirds of the European Gross Domestic Product (GDP), an important indicator of economic health.

The Portuguese economy is relatively small – representing 1.5% of the European GDP – and surpassed by countries with less population like the Czech Republic, Sweden, Denmark, Austria, and Ireland. 

The International Monetary Fund (IMF) forecasts a growth in the Portuguese economy of 2.6% this year and stabilization at around 2% in the medium term, with a fall in inflation to 5.6%. Earlier this year, the IMF had predicted a growth of just 1%. The above-expected growth is mainly attributed to an increase in tourism – after the coronavirus pandemic – and the export of goods.

According to the Portuguese Government, export is increasing and represents 40% of its GDP. Cork is the most exported product – sold to 133 countries – reaching a record of 1.2 billion euros in 2021.

The quality newspaper Expresso disclosed that wine exportations last year  – especially to the US, the UK, Canada, and Brazil – amounted to almost 1 billion euros. Portuguese wine is popular in every continent especially because of its original products like Green Wine, Port, and Madeira Wine.

Moreover, the country is the 4th biggest exporter of olive oil in the world and exports plenty of shoes, clothing, vegetables, and bicycles.

Last year a downward trend in debt and deficit was common in the Eurozone where public debt stood at 92% of GPD – four percentage points lower than at the end of 2021.Eurostat revealed that Portugal was able to register an even more pronounced reduction (eleven percentage points) in 2022, putting its actual public debt at 114%.

Even so, the Portuguese debt remains one of the highest of the 27 member states, just behind Greece and Italy.

The financial rating agency Fitch recently reaffirmed the assessment of the Portuguese debt at BBB+.
The robust reduction in public debt was also highlighted by the US agency, which forecasts that the Portuguese debt will further decrease to 105% next year. 

Even though Portugal’s economy has grown above the EU average this year, it still has one of the lowest growth rates in the world.

According to the newspaper Expresso, the GDP in the country has grown at a mean rate of only 1.2% per year since 1999 and is unlikely to change its course by 2028.

Enjoy the week            Aproveite a semana                                     (pic Público/Sapo)

Government takes majority shares in TAP and Efacec in midst of pandemic

The minority government of António Costa saved this month two strategic companies, securing thousands of jobs. It bailed out flagship airline TAP and nationalised Efacec, the technological company – with over 2500 highly qualified employees and activities in more than 60 countries – brought down by its association with the former first daughter of Angola and richest women in Africa, Isabel dos Santos.

Efacec Power Solutions is not nearly as important as TAP. The idea is only for a temporary nationalisation until the end of the year in order to guarantee that salaries and bank loans can be paid, and the confidence of clients and suppliers restored. A dozen potential buyers from Portugal, Spain, the US and China are on the horizon and it’s only a matter of time before the company is reprivatized.

Buying up Isabel dos Santos’ majority (72%) share in Efacec is moreover a decent way to get rid of her involvement – which has done the company no good since her name was reviled across the media around the world for pillaging her homeland of hundreds of millions, and her assets frozen in Portugal and Angola.

Despite the nightmare of what to do with TAP – crippling losses in recent years exacerbated by a further 395 million loss in the first two months of this year – on the long run, the government has taken a clear stand. ‘TAP is fundamental for our territorial continuity, for our connection to the world and our economic development’, declared PM António Costa. The airline – with a workforce of 10.000 and contributing 2.6 billion to the export in 2019 – is just too important for the nation to let it fall.

By spending 55 million to buy out the American private shareholder David Neeleman, and committing to an injection of 1,2 billion – approved by Brussels – into the company, the state now effectively controls TAP with 72% of the capital and took the ‘worst-case scenario of nationalisation’ off the table.

As the company is in technical bankruptcy with a debt of over 775 million euros, the approval of Brussels will, by all means, imply a substantial restructuring, including a reduction in the number of routes and planes and consequences on employment.
Since the beginning of the pandemic crisis, more than 1000 fixed-term workers have been dismissed due to non-renewal of contracts but undoubtedly more layoffs will follow in the next months.

Stay healthy                          Fique saudável            (pic Público/Sapo)

Before the pandemic, the Portuguese economy grew at a faster pace than the eurozone and the country ranked 28 on the list of wealthiest nations, despite its low rates in advanced education (50% of the population has only primary education; the highest percentage in Europe!) and average income (807 euro/month).

When the Chinese president Xi Jinping visited Portugal 18 months ago, the country willingly signed a multitude of cooperation agreements. At that time the socialist minority administration felt positive about the so-called ‘new Silk Route’.

In the meantime, its ‘golden visa program’ had opened the floodgates to Chinese buying up all sorts of property, banks, hotels and insurance companies.

But the tide has turned. The current public health crisis will drive a contraction in real GDP, and the long-lasting impact of the coronavirus on tourism will prevent a quick recovery in 2021.

An important economic lesson learnt, is to reduce dependence on imports from China. ‘This is the moment for Portugal to return to producing much of what we have been habitually importing’, Prime Minister António Costa declared.

To support the economy and prevent a debt crisis, Portugal can get 26.361 billion euros – 15.526 billion in grants and 10.835 billion in loans – from the European Economic Recovery Fund.

In order to access these funds, the country has to commit to the implementation of a reform plan program approved by the European Commission and the majority of the EU Council.

The government intends to use these assets to decarbonize the economy and reduce the imports of natural gas by developing an industry around hydrogen.
A European hub of ‘green energy’ (so-called because it is produced from renewable energy) close to Sines, one of the country’s major ports.

Sines is the perfect choice with its coal and oil-fired plants being disabled, and the network of existing gas pipelines 70% ready to distribute hydrogen. ‘Green hydrogen will be very cheap to produce and boost qualified employment’, says João Pedro MatosFernandes, the Minister for the Environment and Energetic transition  

Another strategy to overcome the economic crisis caused by the pandemic, is to transform the country into ‘a cluster of industrialisation’, explains Minister of Foreign Affairs Augusto Santos Silva. ‘Portugal wants to be at Europe’s reindustrialisation forefront. We are talking here about textiles, clothing, shoes but also engineering, pharmaceuticals and agrifoods’.

He stressed that the country has important assets it can use like, qualified human resources, low wages, technology, quality of services and dominance in renewable energies.

Stay healthy        Fique saudavel            (pic Público/Sapo)

‘Bury the dead and feed the survivors’  (Marques de Pombal, 1755)

Le Figaro:                        ‘The Portuguese mystery’
Int Busin Times:             ‘Portugal stands tall in the midst of the chaos’
The Guardian:                 ‘Swift action kept Portugal’s coronavirus crisis in check’
Der Spiegel:                     ‘The Portuguese miracle’                                            
El País:                             ‘Portugal, the southern Swedes’ 
Euronews:                       ‘Why has Portugal not been as badly hit as Spain?’       
Politico:                            ‘How Portugal became Europe’s coronavirus exception’

Portugal’s successful battle against Covid-19 has come under international media spotlight and regarded by many as exemplary. With a quarter of the population of big brother Spain, Portugal has around one-tenth of the number of cases and a three times lower mortality rate.

There are a number of different theories for why the virus has caused so much less suffering than in neighbouring Spain.
The hardest to disprove of is: ‘Portugal has its pilgrimage site of Fátima.

With just 4.2 critical care beds per 100.000 people  – the lowest in the EU – and an underfunded public health service, the Portuguese people understood very clearly – after witnessing the horror in Madrid and Milan – that if they wanted to survive, they had to do more than others in pushing forward the number of new cases. Citizens started self-isolation and kept their children from school at the end of February, anticipating the government’s decision to a shutdown in March.

Self-discipline, more preparation time, swift implementation of measures, a geographical location at the edge of Europe, political stability and a bit of luck are probably the main reasons for the relatively mild outbreak in Portugal thus far.

Lisbon’s streets are left to joggers and cats, its glorious beaches cordoned off, the economy asphyxiated, border crossings to Spain sealed, schools and universities closed and more than half of the population leaving home only once a week or less for food, medication and exercise.

Nevertheless, the government prepares to gradually reopen services, businesses and commercial establishments with ‘masks on’, as the economy simply cannot afford to wait under lockdown until the coast is clear.
Schools might restart in early May on a trial basis and even go back into operation on May 13, the anniversary of the appearance of the Virgin Mary in Fátima. Se Deus quiser (Inshallah)!

Fique em casa                       Stay at home                (pic Observ, Público, Sapo)



There is much discussion about mass tourism and golden permits but in Portugal one is inclined to say: ‘don’t kill the chicken with the golden eggs.’ Let’s take a closer look at the expanding tourism industry.

Few destinations have witnessed a boom in tourism like Portugal. According to UN World Tourism Organisation (UNWTO) the country welcomed nearly 7 million international arrivals in 2010. By 2016 that figure had tripled.
Since then tourism revenue has increased by 17%, year-on-year.

The 10 million visitors to the capital – almost as many as the entire Portuguese population –generated last year almost 14 billion euros and more than 180.000 jobs in the greater Lisbon area. The majority of these tourists – 90% arrived by plane and 75% for a short city break – came from Brazil, France, Spain, the US, and the UK. They spent on average 160 euros per day and usually stayed 2-3 nights.

But is overtourism not turning Lisbon into a second Venice, a place saturated with tourists to the point of becoming unsustainable to live in? The increasing number of cruise ships are generating more air pollution than revenues for the local economy and residents in the capital report growing anti-tourist sentiment because of progressive noise and trash nuisance.

More than one-third of the houses in the historical neighbourhoods – Alfama, Baixa, Castelo, Chiado, and Mouraria– are rented out to tourists.
The Baixa Pombalina – one of the first rehabilitated quarters downtown – is filled with hotels and tourist apartments. 20% of the 22,000 hotel beds in Lisbon are situated here and expected to increase even further.

The number of short term rentals –in Portugal registered as alojamento local (AL) – has even overtaken Barcelona, that is 3 times bigger than Lisbon. It is not surprising that the City Council urgently wishes new legislation to restrict permits and maximise percentages for AL.

Foreigners – especially French and Englishmen, followed by Brazilian and Chinese – bought in 2017 almost 12 % of the real estate in the country, in particular in booming Lisbon. Not only the poor but increasingly also the middle class is forced to buy a house in the outskirts of the capital. The city centre is becoming more and more a place for the well-off.

Bom fim de semana              Have a nice weekend            (pic Público/Sapo)

Happiness has many faces, traveling is probably one of them — José Saramago

Tourism is injecting 30 million euros per day into the local economy, whereas the number of hotels in Lisbon has doubled over the last 10 years.

Tourism has not only become one of the most important pillars of the Portuguese gross domestic product (GDP), it also diminished regional asymmetries and unemployment, while increasing the national self-esteem.

Discussing its massive expansion in public, however, has become a new taboo. “The ones who are concerned about the gentrification of the historic city centres, want to destroy the economy. Those who ask for more regulation by government are unrealistic and whoever talks about the negative impact mass tourism has on other European cities, is said to be a manipulator.”

Fact remains that Lisbon and Porto have twice the number of tourists per resident than Barcelona or London and that there exists a lot of discontent about holiday rental services – such as Airbnb – and exorbitant rising rents for local tenants.

Although international tourism is more and more becoming an all year long issue, most tourists prefer to spend their summer holidays in August. They mainly come from the UK and Germany or –by car – from Spain and France,  residing in apartments and small villages, either on the mainland or on the islands of Madeira and the Azores.

The vast majority of the Portuguese celebrate the long school holidays in their own country. Also in August, just like the tourists from abroad. Traveling by car to the northern and central countryside, and staying with the family in a hotel is their favourite way of spending leisure time. Residents of Lisbon love to visit local beaches around the capital or savour free time in their summer cottages in the sunny Algarve.

Only 10% of the Portuguese travel abroad, mostly to nearby European destinations, although Cabo Verde, Morocco, and Turkey are gaining ground. When traveling – both inside and outside the country – the Portuguese spend about 40% less money, compared to their fellow Europeans

(pics Sapo/Publico)


It’s like Lenin said: look for the persons who benefit and you will know.

Once upon a time, there was a friendly country, in the South of Europe bordering the Atlantic Ocean, that used to export cork, tinned sardines and cheap labor.

But back in 2008 things changed as a worldwide economic recession forced the country on its knees. No longer able to pay its government debt, it had to beg friends for help and borrowed a total of 76 billion from the IMF and the European Community.

These friends – that now had become creditors – demanded strict measures, that were enthusiastically implemented by the country’s then conservative government. It started raining austerities for many years and the people suffered.
There were massive cuts in education, health services, and social spending. Salaries plummeted, poverty increased and unemployment skyrocketed to a record 17% in 2013.

But at the end of 2015, the sun broke through the dark clouds and a brand-new socialist government – with the support of more radical parties like the Left Bloc and the Communist Party – came to power. Never before had a coalition of the Democratic Left-ruled the country. Not even in 1975, when the Carnation Revolution re-established democracy.

The message of the new government was crystal clear. Stop austerity measures and increase demand. ‘By refunding income to the people in a moderate way, people get confidence and investment returns’, explains economy minister Manuel Caldeira Cabral.
The new leaders promised to raise the minimum wage, pensions, and social security and a wealth tax was introduced on property valued over 600.000 euro.

And it worked. Two years after taking power the government is showing an economic growth of 2.5% – the strongest since the beginning of the recession – and a reduction of the deficit by half, lower than ever. Meanwhile, foreign investment jumped 13%, unemployment dropped below 10% and 17 billion (65%) of the loan from the IMF is repaid.

In one year 155.000 new jobs were created – a record in twenty years. Tourism and industry – in particular footwear– are booming and export increases more than import.

In two years’ time, Portugal has not only won the European Football Championship and the Eurovision Song festival for the very first time, it also increased public investment, reduced the deficit, beheaded unemployment and sustained economic growth.
It looks like fairy tales do exist.


Lissabon kent een lange geschiedenis. De Feniciërs – die de stad ruim voor onze jaartelling hebben gesticht – noemden haar Alis Ubbo (‘veilige haven’). In de Romeinse tijd werd de stad Olisipo genoemd en tijdens de Moorse overheersing Al-Lishbuna.  Afonso Henriques, Portugals eerste koning, noemde de stad Lix Bona (‘goed water’), dat later Lisboa werd.

Toen zuur
Nadat in 2008 de financiële markten wereldwijd instortten, kwam de economie tot stilstand en moest Portugal bijna 80 miljard van de Europese Gemeenschap lenen om het hoofd boven water te houden. Na jaren van forse bezuinigingen, durven mensen nu weer te dromen en geld uit te geven. Dat zie je vooral in de Baixa – het oude centrum van Lissabon – waar verpaupering en leegstand plaats maken voor herstel en renovatie.

Nu zoet
Het economisch herstel is zintuiglijk merkbaar in de stad. Overal zie en hoor je bouwactiviteiten, je voelt een nieuwe wind, ruikt de luchtverontreiniging op de Avenida da Liberdade en proeft in de talloze eettentjes – zoals op de Mercado da Ribeira, waar gerenommeerde chef-koks een betaalbare versie van hun ‘haute cuisine’ serveren – weer een boeket aan smaken.

Hot en cool
De gezaghebbende en invloedrijke Britse krant de Guardian noemde Lissabon verleden maand dan ook niet voor niets een hotspot en meest coole hoofdstad van Europa. Imposante architectuur, relaxte sfeer, veilig klimaat, heerlijk weer en schitterende stranden op 20 minuten afstand. Klinkt perfect. En niet alleen voor hipsters!

Vooral voor rijken en toeristen

Maar er is ook een keerzijde. Grond- en huizenprijzen –zowel voor huur als koop – rijzen de pan uit, waardoor de binnenstad één groot appartementencomplex dreigt te worden, alleen nog betaalbaar voor de rijken. Dat zijn buitenlanders, die – door het Golden Visa programma – het recht krijgen om zich in Portugal te vestigen, als ze meer dan 500.000 euro voor een woning neertellen.

Een mogelijkheid waar vooral Chinezen gebruik van maken. Maar ook gepensioneerden uit Frankrijk en Zweden – die profiteren van het lage belastingtarief in Portugal – weten het land te vinden.

Karakteristieke buurtwinkeltjes en authentieke restaurantjes worden meer en meer opgeslokt door prijzige boetieks, dure hotels, fastfood restaurants, en internationale kledingketens, die meer voldoen aan de behoeftes van de blote-benen-toeristen dan aan die van de lokale bewoners. (Touristentsunami)

Socialistische regering
Het zal voor de politiek niet gemakkelijk worden om het juiste midden te vinden tussen de expansiedrift van de projectontwikkelaars – de laatste vijf jaar werd voor bijna ½ miljard aan stedelijk erfgoed verkocht – de ‘booming’ toeristenindustrie en de belangen van de minder bedeelde stadsbewoners. Toch lijkt het erop dat de socialistische regering onder leiding van António Costa – voormalig burgemeester van de stad – deze laatste groep niet wil vergeten.

Geniet van het weekend         Tenha um excelente fim de semana