The Economy of Portugal

Portugal has a highly market-driven economy. By the end of 2006, its GDP is about $230 billion based on PPP which the 34th biggest in the world. In 2005, the World Economic Forum ranked Portugal 22nd in its Global Competitiveness Report ahead of EU neighbors such as Spain, France, Ireland and Belgium. While on the Technology and Public Institution indexes, it ranked 20th and 15th respectively.

Almost 66% of Portugal’s GDP is attributed to the service sector providing more than 50% jobs of the working population coming from communication, transportation, tourism, and finance. The building and energy sectors account 30% while agriculture and fisheries contributions fell to about 4% though employing utilizing 13% of the working force. Industries that made significant contributions to the economy comprise of oil refineries, cement production, automotive and shipping industries, machinery, injection moulding, textile, and cork production. Since 2000, the unemployment rate of Portugal has been increasing. In 2005, it reached 7.6% and estimated to peak at 9% by the end of 2008.

In 1986, Portugal became an official member of the European Union (EU). A large part of its imports come from other EU members like the United Kingdom, Spain, France, Italy, Netherlands, and Germany. Majority of its export activities is also in partnership with EU countries. In 2005, total value of exported products is estimated at #39 billion that includes clothing, footwear, machinery, paper products, and chemicals. The GDP per capita of Portugal is still considered to be one of the lowest in Western Europe. The Economist labeled Portugal as “a new sick man of Europe” in its April 2007 edition.