Economic History

Portugal became a member of the European Union in 1986 thus entering the Common Market. Between 1985 and 1989 the Portuguese GDP increased by an average of 4.4% which is far superior to other European countries. During this period the country managed to draw its social and economical markers closer to the European averages. Since 1990 Portugal has been affected by the economic crisis of the old continent and its growth has been hindered. The country nevertheless did meet the Maastricht Treaty requirements and qualified for joining EMU (European Monetary Union). In 1998 growth rate reached 3.5%, which even if it is below the aimed standard, remains above the average growth of the EU countries. Inflation in 1997 was 1.9% and the public deficit was 2.45% of GNP. Whereas the inflation rate slightly increased in 2000, up to around 2,8%, above the Union's average, economic growth slowed down and for the first time since the country entered the European Union the growth rate in 2000 was below the European average. However the future does not look bad.

Portugal has made significant progress in raising its standard of living to that of its EU partners. GDP per capita on a purchasing power parity basis rose from 51% of the EU average in 1985 to 78% in early 2002. By 2005 this had dropped to 72% (of the average across all of now 25 EU members, including seven with GDP per capita lower than Portugal) as GDP per capita rose in other EU countries. Unemployment stood at 4.1% at the end of 2001, which was low compared to the EU average.

Demographics

Portugal has an estimated population of 10 848 692  inhabitants as per july 2007, which means a density of 114 per km². Portugal, long a country of emigration, has now become a country of net immigration, and not just from the former Indian and African colonies; by the end of 2003, legal immigrants represented about 5% of the population, and the largest communities were from Brazil, Ukraine, Romania, Cape Verde, Angola, Russia, Guinea-Bissau and Moldavia with other immigrants from parts of Latin America, China and eastern Europa. The great majority of Portuguese are Roman Catholic, though a large percentage consider themselves non-practicing, especially in urban areas. The Portuguese population is very reactive and open to technical progress. Portugal has the lowest criminality rate in all Europe.

Government

Portugal is a democratic republic ruled by the constitution of 1976, with Lisbon, the nation's largest city, as its capital. The four main governing components are the president of the republic, the assembly of the republic, the government, and the courts. The constitution grants the division or separation of powers among legislative, executive, and judicial branches. Portugal like most European countries has no state religion, making it a secular state.

The president, who is elected to a five-year term, has a supervising, nonexecutive role. The current President is Anibal Cavaco Silva. The Assembly of the Republic is a unicameral parliament composed of 230 deputies elected for four-year terms.

The Portuguese government supports foreign investers and market economy. It ensures repatriation of profits and capital invested in Portugal and guarantees equal access to all sectors of economy.

Infrastructures

Transportation was seen as a priority in the 1990s, pushed by the growing use of automobiles and industrialization. The country has a 68 732 km network of roads, of which almost 3 000 km are part of a 44 motorways system. The two principal metropolitan areas of lisbon and Oporto have subway systems, each with more than 35 km of lines. Construction of a high-speed TGV line connecting Porto with Lisbon and Lisbon with Madrid will begin in 2008; it will replace the Pendolinos.
The government decided to build a new airport outside Lisbon, in Alcochete, to replace Lisbon's Portela airport. Currently, the most important airports are in Lisbon, Faro and Oporto.
Portugal has one of the highest mobile phone penetration rates in the world (the number of operative mobile phones already exceeds the population). This network also provides wireless mobile Internet connections as well, and covers the entire territory. As of October 2006, 36.8% of households had high-speed Internet services and 78% of companies had Internet access. Most Portuguese watch television through cable (June 2004: 73.6% of households). Paid Internet connections are available at many cafés, as well as many post offices. One can also surf on the Internet at hotels, conference centres and shopping centres, where special areas are reserved for this purpose. Free internet access is also available to Portuguese residents at "Espaços de Internet" across the country.
In 2006 the world's largest solar power plant began operating in the nation's sunny south while the world's first commercial wave power farm opened in October 2006 in the Norte region. As of 2006, 55% of electricity production was from coal and fuel power plants. The other 40% was produced by hydroelectrics and 5% by wind energy. The government is channeling $38,000,000,000 into developing renewable energy sources over the next five years.

Economic activity

Portugal's economy is based on industries such as textiles, clothing, footwear, cork and wood products, beverages (wine), porcelain and earthenware, and glass and glassware. In addition, the country has increased its role in Europe's automotive sector and has a world-class mold-making industry. Services, particularly tourism, are playing an increasingly important role. Portugal's EU funding will be cut by 10%, to 22.5 billion euros, during the 2007-2013 period. EU expansion into eastern Europe has erased Portugal's historic competitive advantage and relative low labor costs. The governments are working to change Portugal's economic development model from one based on public consumption and public investment to one focused on exports, private investment, and development of the high-tech sector.
When Portugal joined the European Union in 1986 it started a process of modernization within the framework of a stable environment. It has achieved a healthy level of growth. Successive governments have implemented reforms and privatized many state-controlled firms and liberalized key areas of the economy. Portugal was one of the founding countries of the euro in 1999, and therefore is integrated into the Eurozone.
Major industries include oil refineries, automotive, cement production, pulp and paper industry, textile, footwear, furniture, and cork (of which Portugal is the world's leading producer).

Export/ Import

Portugal 's exterior trade is essentially centered within the EU. Today 80% of Portuguese export is towards the EU countries, 5% towards North America, and 4% towards the Portuguese speaking countries. Manufacturing such as textile, clothes, shoes, cork (world leader), machinery, transportation and automobile equipment, wood pulp and paper components, and chemical products, accounts for 33% of exports. Portugal is the world's fifth-largest producer of tungsten, and the world's eighth-largest producer of wine. Agriculture and Fishing no longer represents the bulk of the economy, but Portuguese wines, namely Port Wine and Madeira Wine are exported worldwide.

Imports come from the EU for 76%, 4% from North América and 1% from the Portuguese speaking countries.

Tourism is a major sector accounting for 8% of the GDP, especially in mainland Portugal's southernmost region of the Algarve and in the Atlantic Madeira Archipelago. Spain is the main source of tourists (49%) followed by the United Kingdom. (14%).