Portugal details - Export & Investment

Portugal - Basic Data

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Portugal - Basic Data (March 2011)

Index

1. Background 3

1.1 Geography 3

1.2 Population and language 3

1.3 Summary 3

2. Politics 4

3. Infrastructures 4

4. Economy 4

4.1 Economic structure 4

4.2 Current economic situation and outlook 5

5. International trade 6

6. International investment 8

6.1 Foreign direct investment in Portugal 8

6.2 Portuguese foreign direct investment 9




Background

Mainland Portugal is geographically located in Europe’s West

Coast, on the Iberian Peninsula. It is bordered by Spain to the

North and East and by the Atlantic Ocean to the West and South,

making it a privileged geo strategic location between Europe,

America and Africa.

In addition to the mainland, Portugal’s territory also includes

the Autonomous Regions of the Azores and Madeira, two

archipelagos located in the Atlantic Ocean.

Portuguese borders have remained unchanged since the XIII

Century, making Portugal one of the oldest countries in the

world, with nearly 900 years of history that clearly demonstrates

its strong identity and internal cohesion.

Geography

On mainland Portugal, the Tagus River, Portugal’s largest river,

divides the high mountainous lands and plateaus of the North,

from the low lying plains of the South. Also the flat coastal area

contrasts with that of the inland. The highest peaks are found in

a mountainous range in the centre of the country, of which Serra

da Estrela is the highest with 1,991 m. On the archipelagos, Pico

(2,351 m) is the highest peak in the Azores, while Pico Ruivo

(1,862 m) is the highest peak in Madeira.

The coast of mainland Portugal is mostly unbroken, except for

two major estuaries (Tagus and Sado). There are also small bays

(Peniche, Sines and Lagos) and lagoons (Vouga-Aveiro, Óbidos

and Faro). Headlands are few in number, small in size but of great

beauty: these include the Capes of Mondego, Carvoeiro, Roca,

Espichel, Sines, S. Vicente and Santa Maria.

Portugal’s agreeable climate offers mild winters and pleasant

summers. The wettest months are November and December,

whilst the driest are from April to September.

Population and language

Portugal’s population is estimated at 10.6 million people, of

which more than half are economically active. The demographic

concentration is higher near the coastal areas, with Lisbon (the

capital city) and Porto showing the highest population density.

The Portuguese language is spoken by more than 200 million

people spread over all continents: Europe, Africa, America and

Asia. This diversity greatly contributes to the strong historical and

cultural ties that Portugal has with the world.

Summary

Area: 92,207.4a sq km

Population (thousands): 10,636 (2010)

Working population (thousands):

5,581 (2010)

Population density (inhabit./sq km):

115.4 (2010)

Official designation: Republic of Portugal

Capital: Lisbon (2.1 million inhabit.– metropolitan area)

District Capitals:

Aveiro, Beja, Braga, Bragança, Castelo Branco, Coimbra, Évora, Faro, Funchal (in Madeira), Guarda, Leiria, Ponta Delgada (in the Azores), Portalegre, Porto, Santarém, Setúbal, Viana do Castelo, Vila Real and Viseu.

Main religion: Roman Catholic

Language: Portuguese

Currency: Euro (in units of 100 cents)

EUR = 200.482 PTE (fixed parity 1/01/99)

EUR = 1.3257 USD (average rate in 2010)

GDP at market prices: 172,837 million EUR (2010)

GDP per capita: 16,300 EUR (2010)

Source: INE - Instituto Nacional de Estatística; Banco de PortugalNote: (a) INE – Portuguese Statistical Yearbook 2010




Politics

The Republic of Portugal is a Parliamentary democracy, based

on the respect and the effective guarantees for fundamental

rights and freedoms and the separation and interdependence of

powers. Under the Portuguese Constitution, sovereign powers

are vested in the President of the Republic, the Assembly of the

Republic, the Government and the Courts.

The President of the Republic is the Head of State, elected by

direct universal suffrage for a five year term, with a maximum of

two terms. The current President of the Republic is Aníbal Cavaco

Silva who was re-elected on 23rd January 2011.

Legislative power lies with the Parliament (Assembly of the

Republic) represented by 230 members which are elected by

popular vote to serve a four year term.

Executive power lies with the Government, headed by the Prime

Minister, the Ministers and the Secretaries of State. José Socrates,

Portugal’s Prime Minister and the leader of the Socialist Party

won the legislative elections in 2009.

The Portuguese judicial system consists of several categories of

Court, independent of each other, with their own structure and

rules. Two of these categories are composed only by one Court

(the Constitutional Court and the Court of Auditors). The Judicial,

Administrative and Fiscal Courts are numerous, hierarchically

structured and respond to a Supreme Court. In addition, there are

Maritime Courts, Courts of Arbitration and Justices of the Peace.

Infrastructures

Road Infrastructures: Portugal has one of the most developed

road networks in Europe, comprising of motorways (AE), main roads

(IP), secondary roads (IC), national roads (EN) and municipal routes.

In 2009, the mainland road network reached 13,112 km, of which

2,705 km was motorway, more than 1/5 of the total road network.

Rail Network: The rail network comprises 3,600 km (2,842 km

with rail traffic) providing North-South connection down the

coastline and East-West across the country. Railway network

density tends to be more significant in regions with a higher

population concentration.

Airports: There are 14 airports. On the mainland the three major

international airports are located in the coastal cities of Lisbon,

Porto and Faro. A new airport is to be built in the Lisbon region.

Due to the isolation of the Autonomous Regions there are a

larger number of airports. The Azores have nine and Madeira has

two. Most international airlines serve the country’s main airports.

The Portuguese airline is TAP Portugal.

Maritime Routes: Mainland Portugal has nine major ports: Viana

do Castelo and Leixões, in the North; Aveiro and Figueira da Foz,

in the Centre; Lisbon and Setúbal in the Lisbon region; Sines in

the Alentejo; Faro and Portimão in the Algarve. The Autonomous

Region of the Azores has five ports and the Autonomous Region

of Madeira has three. Only Lisbon and Leixões on the mainland

offer passenger services, though the number of passengers

embarking and disembarking at Leixões port is insignificant. The

port infrastructure is thus primarily geared to handling goods.

This is particularly so at Sines (39.3% of total in 2010), Leixões

(22.4%) and Lisbon (18.5%).

Economy

Economic structure

Following the trend of its European partners, over the last decades

one of the most important characteristics of the structure of the

Portuguese economy is the increase in the services sector. In 2010,

agriculture, forestry and fishing generated only 2.7% of GVA

(compared with 24% in 1960), and 10.9% of employment, while

industry, construction, energy and water represented 22.8% of GVA

and 27.7% of employment. The services sector generated 74.5% of

GVA and represented 61.4% of the labour force.

Apart from a greater focus on services, there has also been significant

change in manufacturing, which has undergone a modernization

process. Traditional manufacturing has been gradually replaced by

new activity sectors that offer a larger incorporation of technology

and that have contributed to the growth of the Portuguese economy,

namely motor vehicles and parts thereof, electronics, energy,

pharmaceutical and the new technologies.

Portugal’s geographic position also impacts on the growth of the

services sector. 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 industry.

GVA Breakdown – 2010

Services Agriculture, forestry, and fishing

Industry, construction, energy and water

Source: INE – Instituto Nacional de Estatística Note: GVA - Gross Value-Added

2.7%

22.8%

74.5%




Current economic situation and outlook

After significant progress in the modernization of the economy over the last years, in conjunction with the implementation of consolidating budget measures and structural reforms which

Sources: GEE – Gabinete de Estratégia e Estudos based on INE – Instituto Nacional de Estatística, and Banco de Portugal, except where stated in contraryNotes: (a) Forecast: Eurostat; European Commission; Banco de Portugal; EIU - Economist Intelligence Unit (b) INE – Employment Statistics; EIU (c) INE; European Commission (d) Eurostat; European Commission Exchange rate EUR/USD – Banco de Portugal and EIU n.a. – not available

Economic Indicators 2006 2007 2008 2009 2010 2011a 2012a

GDP at market prices Million EUR 160,273 168,737 172,022 168,074 172,837 174,100 175,400

Million USD 201,944 231,170 252,872 233,623 229,873 217,625 210,480

Real change 1.4 2.4 0.0 -2.5 1.4 -1.4 0.3

Per capita Euro 15,143 15,906 16,194 15,805 16,300 16,350 16,437

USD 19,080 21,791 23,805 21,969 20,438 19,724 19,720

Per person employed Nominal change 3.5 5.1 1.4 0.5 4.4 2.3 0.7

Private consumption Million EUR 104,746 110,635 115,704 111,949 116,033 116,400 117,200

Real change 1.8 2.5 1.8 -1.0 2.0 -1.9 -1.0

Public consumption Million EUR 32,421 32,999 33,961 35,826 37,207 36,400 36,000

Real change -0.6 2.0 -0.5 -14.0 3.2 -6.6 -1.0

Investment/GFCF Million EUR 35,890 37,629 38,151 32,756 32,056 32,300 32,800

% of GDP 22.4 22.3 22.2 19.5 18.5 18.6 18.7

Real change -1.3 2.6 -1.8 -11.6 -4.8 -5.6 -1.3

GFCF (excl, construction) % of GDP 8.5 8.7 8.8 7.7 7.2 n.a. n.a.

Real change 4.6 7.6 4.3 -11.6 -3.6 n.a. n.a.

Population (b) ‘000 inhabitants 10,599 10,618 10,627 10,638 10,636 10,667 10,684

Employment (b) ‘000 individuals 5,160 5,170 5,198 5,054 4,978 4,900 4,900

Unemployment (b) ‘000 individuals 428 449 427 529 603 600 700

Rate of economic activity (b) % of total pop. > 15 years old 62.5 62.6 62.5 61.9 61.9 n.a. n.a.

Unemployment rate Portugal (c) % of active population 7.7 8.0 7.6 9.5 10.8 11.1 11.2

Unemployment rate EU-27 (d) % of active population 8.2 7.2 7.0 8.9 9.6 9.5 9.1

Overall balance - General Government % of GDP -4.1 -2.8 -2.9 -9.3 -7.3 -7.4 -6.5

Public Debt % of GDP 64.7 62.7 65.3 76.1 82.8 88.8 92.4

Current Account Balance Million EUR -17,187 -17,074 -21,699 -18,362 -17,060 -13,928 -11,752

% of GDP -10.7 -10.1 -12.6 -10.9 -9.9 -8.0 -6.7

HCPI – Portugal Annual change – average 3.0 2.4 2.7 -0.9 1.4 3.6 2.0

HCPI – EU-27(d) Annual change - average 2.3 2.4 3.7 1.0 2.0 2.5 1.8

initiated the rise allowing progress towards a more sustainable

economy; Portugal was seriously affected by the international

crisis, that strongly influenced the country’s economic activity

performance since 2008, culminating with the contraction of

2.6% of GDP in 2009.

However, the gradual improvement of demand on a global scale

and of the economy of our main trade partners, which started at

the end of 2009, allowed Portugal to retake a growth trajectory

in 2010 (GDP rose 1.4% during the same period). The main

reason for that recovery was the performance of our exports.

In an uncertain financial market and with the negative effects of

the risk of national debt default in accessing finance, the evolution

of the Portuguese economy continues to be determined by the

necessity of budget consolidation and by the strengthening of

the process of adjustment of the macroeconomic imbalance,

with repercussions in the economic growth and employment.

The forecast indicates a new constraint in the economy for 2011

and a moderate improvement in 2012.

Employment Breakdown - 2010

Services Agriculture, forestry and fishing

Industry, construction, energy and water

Source: INE – Instituto Nacional de Estatistica

10.9%

27.7%

61.4%




International trade

After the loss verified in 2009, in 2010 there was a significant

increase in Portuguese exports. Portugal benefited from an

increase in international demand and from the economic

recovery of our main trade partners, which started at the end of

2009, and was consolidated during 2010.

These factors were the reasons for an increase in exports of

goods and services, with a greater emphasis on goods (15.7%)

than on services (7.7%).

In 2010, Portugal’s export markets for goods, continued to grow

towards a broader diversification of trade partners (during the

last decade, EU countries have lost market share in favour of

third countries, which already accounted for ¼ of total exports).

The largest positive growth rate in value is in exports to Spain,

Germany, France and the USA, that together represented a

50% increase of the total registered in 2010.

In terms of traded products, in general there was an increase

in 2010, in relation to the previous year, but the major

contribution to the positive evolution of exports of goods was

determined by Fuels to non-EU countries; Vehicles and other

transport equipment, Pulp and paper, Plastics and rubber to the

EU countries.

A larger internal demand contributed to the increase of imports

and a slight deterioration in the trade balance. As with exports,

Fuels and Vehicles and other transport equipment, were the

group of products that mostly contributed to the increase of

imports in 2010.

Portugal’s International Trade 2005 2006 2007 2008 2009 2010 Change %(10/09)

Trade in goods and services1

Exports (fob) Million EUR 43,375 50,495 55,486 57,066 48,339 54,470 12.7

Imports (fob) Million EUR 57,689 63,883 68,159 73,449 60,148 65,692 9.2

Balance (fob) Million EUR -14,314 -13,388 -12,673 -16,383 -11,809 -11,222 -5.0

% of GDP -9.3 -8.4 -7.5 -9.5 -7.0 -6.5

Trade in goods2

Exports (fob) Million EUR 31,137 35,640 38,309 38,950 31,768 36,769 15.7

Imports (cif) Million EUR 51,379 56,295 59,927 64,194 51,368 56,783 10.5

Balance (fob-cif) Million EUR -20,242 -20,654 -21,617 -25,244 -19,600 -20,014 2.1

% of GDP -12.4 -12.0 -11.9 -14.0 -11.7 -11.6

Sources: (1) Banco de Portugal (Balance of Payments) (2) INE – Instituto Nacional de Estatística (initial data)

Source: INE – Instituto Nacional de Estatística (initial data)Note: (a) Includes: Morocco, Algeria, Tunisia, Libya and Mauritania (b) Includes associate members

Source: INE – Instituto Nacional de Estatística (initial data)Note: (a) Includes associate members (b) Includes: Morocco, Algeria, Tunisia, Libya and Mauritania

UE 27

PALOP

NAFTA

MAGHREB (a)

Mercosul (b)

Other

Geographical Distribution - Exports - 2010

UE 27

Mercosul (a)

NAFTA

MAGHREB (b)

PALOP

Other

Geographical Distribution - Imports - 2010

10.6%

74.0%

6.6%

5.2%

1.9%

1.7%

2.6%2.2%2,2%1.1%

16.3%

75.6%




Trading Partners – Main Clients - 2010

Source: INE – Instituto Nacional de Estatística (initial data)

Trading Partners – Main Suppliers - 2010


Imports – Main Products

Exports – Main Products


Spain

Germany

France

UK

Angola

Netherlands

Italy

USA

Belgium

Brazil

Others

26.6%

13.0%

11.8%5.5%

5.2%

3.8%

3.6%

2.9%1.2%

22.6%

3.8%

Spain

Germany

France

Italy

Netherlands

UK

Belgium

China

Nigeria

Brazil

Others

31.1%

13.9%7.2%

5.7%

5.2%

3.8%

2.8%2.8%2.4%1.8%

23.3%

Machinery and tools

Vehicles and other transport material

Base metals

Plastics and rubber

Oil products

Clothing

Wood Pulp and paper

Other products

Minerals and mineral products

Agricultural Products

Food Products

Chemical Products

Textile materials

Footwear

Wood and cork

Optical and precision instruments

Skins and leather

0

16,2%

11,7%

7,8%

6,4%

5,0%

6,8%

4,7%

6,0%

5,6%

5,5%

6,1%

4,9%

4,3%

4,0%

3,7%

1,1%

0,3%

14,9%

12,4%

8,0%

6,9%

6,8%

6,0%

5,7%

5,6%

5,5%

5,4%

5,2%

5,0%

4,1%

3,6%

3,5%

1,1%

0,3% 2010 2009

Machinery and tools

Oil products

Vehicles and other transport material

Chemical Products

Agricultural Products

Base metals

Plastics and rubber

Food Products

Other products

Clothing

Textile materials

Wood Pulp and paper

Optical and precision instruments

Minerals and mineral products

Wood and cork

Skins and leather

Footwear 2010 2009

19,2%

12,6%

12,2%

10,2%

10,0%

7,7%

4,9%

4,5%

3,4%

3,1%

2,7%

2,5%

2,3%

1,6%

1,1%

1,0%

0,9%

16,3%

14,7%

14,1%

10,0%

9,5%

7,9%

5,1%

4,1%

3,3%

3,0%

2,8%

2,3%

2,2%

1,4%

1,2%

1,0%

0,9%

0




International investment

Foreign direct investment in Portugal

Since 2000, FDI in Portugal has shown a steady growth, with

gross investment ranging between 20 and 35 billion EUR and

which has been directed towards the innovative and technological

based industries that have international markets as clients.

In 2010, FDI into Portugal reached a gross value of 35 billion

Euros, which represented an increase of 9.6% in relation to the

previous year. In net terms the reduction was significant reaching

43.7%. This unfavourable behaviour of net FDI results from a

strong negative impact of the economic international financial

crisis, not only on the economy of the countries that traditionally

invest overseas, but also of the main recipients, forcing them to

rethink their strategies and their external ranking.

By activity sector, in 2010, Wholesale and Retail Trade,

Manufacturing Industry and Financial and Insurance Activities were

the sectors that most benefited from foreign capital in Portugal,

representing, in total, around 82% of the total gross FDI.

The EU countries remain the main investors in Portugal (86.6%

in 2010), with Germany, France, United Kingdom and Spain

occupying the leading positions in the ranking. Outside the EU27

members, only Brazil and Switzerland appeared on the list of the

top 10 foreign investors in Portugal.

Foreign Direct Investment in Portugal per Sector - 2010a

Source: Banco de Portugal (February 2011) Note: (a) Gross Investment

Foreign Direct Investment in Portugal per Country of Origin - 2010a


Trends in Foreign Direct Investment in Portugal

Source: Banco de Portugal (February 2011) Unit: Million EUR

Gross investment Net investment

2005 2006 2007 2008 2009 2010

27,677

35,287

1,948

32,018

1,0973,160

8,695

2,238 3,185

32,820 32,63435,099

Consultancy, scientific and technical activities

Real estate activities

Construction

Electricity, gas and water

Others

39.3%

24.4%

18.2%

5.6%

3.1%

1.2% 6.6%

1.0% 0.6%

Wholesale and retail trade

Manufacturing

Financial and insurance activities

Information and communication activities

Germany

France

UK

Spain

Netherlands

Luxembourg

Brazil

Switzerland

Belgium

Ireland

Others

18.3%

16.7%

13.8%13.6%

10.3%

7.0%

5.5%

5.2%

2.4%

1.8% 5.4%




Portuguese foreign direct investment

Over the last 10 years gross Portuguese direct investment abroad

(PFDI) was estimated at between 6 and 15 billion Euros.

The period from the late 90’s and the beginning of the present

decade was clearly marked by great outflows of Portuguese

investment, mainly toward Spain and Brazil.

After an exceptionally positive year in 2007, the following three

years reflected a clear slow down of the Portuguese companies’

overseas projects, as a consequence of the environment of

uncertainty generated by the international financial economic

crisis, the gross transfers of overseas capital reached 5.8 billion

Euros, the lowest amount since 2003.

In 2010, Portuguese companies invested mostly in the Financial

and Insurance Activities sector (59% of the total). The main

markets for those investments were Luxembourg, Spain,

Netherlands and Brazil which, together, represented more than

60% of the total Portuguese FDI flow for that period.

In recent years, there has been a broader diversification of

destinations for Portuguese overseas investment, with EU-27

showing a reduction in total investment. Apart from Brazil, there

is an increase in interest for the PALOP’s (African Portuguese

Speaking Countries), with particular emphasis on Angola, which

received 4% of total Portuguese FDI in 2010) and for Eastern

European countries, in particular Poland (an increase of 242% in

2010) and Romania (an increase of 30%), witch are part of the

10 top countries of destination of Portuguese FDI.


Portuguese Foreign Direct Investment per Sector - 2010a

Portuguese Foreign Direct Investment by Major Recipients - 2010a

Trends in Portuguese Foreign Direct Investment

Source: Banco de Portugal (February 2011) Unit: Million EUR

Gross investment Net investment

9,781

2005 2006 2007 2008 2009 2010

1,697

9,828

5,691

14,835

4,0131,872

11,376

7,770

588

5,774

-6,500

59.3%12.0%

8.6%

6.6%

5.7%

0.8%

0.7% 0.5%5.8%

Financial and insurance activities

Consultancy, scientific and technical activities

Wholesale and retail trade

Construction

Manufacturing

Electricity, gas and water

Information and communication activities

Real estate operations

Others

Luxembourg

Spain

Netherlands

Brazil

Angola

Poland

USA

UK

Romania

France

Others

22,0%

16,1%

14,4%

11,3%3,9%

3,8%

3,2%2,3%1,8%1,5%

19,7%
