Economic trends
From the beginning of 2009, Portugal is in the core of a deep recession, caused by the collapse of foreign demand and the restrictive financial conditions that have affected all the sectors of the economy, such as exports and investments in particular. After it was contracted to 2.7% in 2009, the Portuguese economy has experienced a moderate growth again in 2010, estimated at 1.1% of the GDP.
Due to the increase in public expenditure aimed to support the economy, the budgetary situation was highly deteriorated, the deficit reached more than 7% of the GDP. The public debt has also experienced an important increase, surpassing 90% of the GDP for the first quarter 2011. Facing this situation, the government established a severe plan intended to control and to reduce expenditures through a fiscal tax increase. A large plan of privatization has also been launched in order to increase revenues. Structural measures were also announced, including a labor code reform that allows more flexibility. The country should receive a financial assistance from the EU and IMF, which could reach 80 billion EUR.
With an unemployment rate that has risen to around 10%, an increase of differences between the north and the south, and the erosion of the purchasing power, the social tensions have become evident in Portugal.
Main branches of industry
The agricultural sector is not so productive because it is less mechanized; it represents a little over 2% of Portugal's GDP and employs 11.5% of the population. The main productions are cereals, fruits, vegetables and wine. The exports of Port wine represent 1.4% of total exports. Portugal has many natural resources. The mining sector (copper, tin) represents 6% of the GDP and Portugal is one of the main exporters of marble. The forests of Portugal provide a large portion of the world's cork supply.
The manufacturing industry is modern and it is made up of small and medium-sized companies. Its main sectors of activity are metallurgy, mechanical engineering, textiles and construction. Moreover, the country has increased its role in the European automobile sector and has a world class mold manufacturing industry.
Services, particularly tourism, play an important role which is rapidly increasing. The tertiary sector contributes to more than 70% of the GDP.
International trade
Portugal's economy is open to foreign investment, trade represents more than 70% of the GDP (during the period 2007-2009). Becoming a member of the European Union changed the structure of the Portuguese imports and exports. The country exports more and more technological equipment instead of the traditional agricultural products or products from the textile and clothing industry.
The European Union is Portugal's main customer, followed by the United States. Other commercial partners of Portugal are China, Nigeria and Brazil.
The trade balance of Portugal is structurally in deficit, however its balance experienced an improvement during the crisis, due to the fall of imports which was much higher than the drop on exports. Since the beginning of 2011, Portugal has experienced a decline in its trade deficit over the same period in 2010, thanks to higher exports.
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Last updates: January 2012
