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The Portuguese economy, following the EU trend, has seen, over the last decades, an overall increase of the services sector. In 2011, the services sector generated 74.5% of GVA and represented 62.8% of the labour force. Agriculture, forestry and fishing generated only 2.1% of GVA (compared with 24% in 1960), and 9.9% of employment, while industry, construction, energy and water represented 23.3% of GVA and 27.3% of employment.
There has also been significant change in the manufacturing sector, which has undergone a modernization process. Traditional manufacturing has been gradually replaced by new production capabilities thanks to the use of new technologies and this has had a positive impact in the growth of the Portuguese economy. Motor vehicles, motor vehicles parts, electronics, energy, pharmaceutical and high-tech are now high on the list of manufacturing goods made in Portugal.
Portugal’s geographic position also has an impact on the growth of the services sector, in particular tourism. The mild Mediterranean climate regulated by the influence of the Atlantic, together with its extensive coastline, are significant factors driving the growth of the tourism sector. In 2012, the portuguese tourism revenue increased 5 per cent compared to 2011, reaching 8 billion euros. The increase of foreign visitors was substantial and accounted for the positive financial impact.
Current economic situation and outlook
The sovereign-debt crisis in the Euro Zone beginning in 2010 led to the deterioration of the conditions of access to international financial markets. For the Portuguese economy, with a high level of external debt, low economic growth, and excessive public deficits, the sustainability of public finances was jeopardized, making inevitable the request for the financial assistance to the European Union and the IMF in April 2011.
The main strategic guidelines of the Adjustment Programme, valid until 2013, were designed to maintain a balanced and sustainable economic development in the medium-long term; to eliminate restrictions to economic growth, promote competiveness and employment, and ensure a sustainable path for public finances.
Its impact on the Portuguese economy is, nevertheless, very significant. Economic activity contracted in 2011 (-1.6%) and is expected to decline further this year (-3.3%). In 2013, a slow recovery should take hold (+0.3%), mainly supported by exports, which continue to make a significant contribution to economic growth, although not enough to offset the impact of restrictive measures on the economy, causing a decrease in consumption and investment.