THE ECONOMY OF PORTUGAL

The Economy of Portugal is of a mixed nature and functions in support of a high income country. The Global Competitiveness Report 2012-2013 edition, placed Portugal in the 49th position out of 144 countries and territories. 

Most imports come from the European Union (EU) countries, as Spain, Germany, France, Italy, and the United Kingdom, while most exports also involve other EU member states. The Portuguese currency is the euro (€) and the country has been a part of the Eurozone since its inception. Portugal's central bank is the Banco de Portugal, which forms part of the European System of Central Banks, and the major stock exchange is the Euronext Lisbon, which belongs to the NYSE Euronext, the first global stock exchange. 

Despite the gradual modernization and relative expansion of the Portuguese educational system since the 1960s, it remained underdeveloped until the 2000s, when it achieved recognition for its world-standard practices and trends. However, Portugal has been increasingly targeted by lower-cost producers in Central Europe and Asia for the purpose of foreign direct investment. Such long-term problems have hindered a significant amount of the economic growth in Portugal.

The Financial Crisis of 2008 continues to severely affect the Portuguese economy and it shrank for the third consecutive year in 2013. The crisis has caused a wide range of domestic problems that are specifically related to the levels of public deficit, as well as the excessive debt levels, in the economy. Nonetheless, the government faces tough choices in regard to its attempts to stimulate the economy while it also seeks to maintain its public deficit around the EU average. In April 2011, following the decisions of Greece and the Republic of Ireland, Portugal confirmed a financial bailout from the European Union that was worth €78 billion. Predictions state that the Portuguese economy will not significantly recover until 2014. 

Portugal is home to a number of notable leading companies with worldwide reputations, such as Grupo Portucel Soporcel, a major world player in the international paper market; Sonae Indústria, the largest producer of wood-based panels in the world; Corticeira Amorim, the world leader in cork production; and Conservas Ramirez, the oldest operational canned fish producer.

The Portuguese Financial crisis is a major political and economic crisis that started during the initial weeks of 2010. It is the Portuguese economy's most severe recession since the 1970s. 

A report published in January 2011 by the Diário de Notícias, a leading Portuguese newspaper, demonstrated that during the period of the Carnation Revolution, from 1974 to 2010, the democratic Portuguese Republic governments have encouraged over-expenditure and investment bubbles through unclear public-private partnerships. Consequently, numerous ineffective external consultancy/advising committees and firms were funded, and this facilitated considerable slippage in state-managed public works, inflated top management and head officers' bonuses and wages. Additionally, a recruitment policy eventuated has boosted the number of redundant public servants. 

For almost four decades, the nation's economy has also been damaged by risky credit, public debt creation, and mismanaged of European structural and cohesion funds. Apparently, Prime Minister Sócrates's cabinet was unable to forecast or prevent the crisis when symptoms first appeared in 2005, and was later incapable of doing anything to ameliorate the situation when the country was on the verge of bankruptcy in 2011. In 2010, acronyms were widely used by international bond analysts, academics, and the international financial press when referring to the underperforming economies of Portugal, Italy, Ireland, Greece and Spain.

In April 2011, Portugal confirmed the receipt of a financial bailout from the IMF and the European Union worth €80 billion ($115 billion, £70 billion), following Greece and the Republic of Ireland. Some senior German policymakers publicly stated that emergency bailouts for Greece and future EU aid recipients should be accompanied by harsh penalties.

The year 2013 is the final period of the three-year EU aid program and it is anticipated that the conclusion of the EU's support package, worth €78 billion, will leave Portugal with a €12 billion funding gap in 2014. 

According to data from February 2013, the unemployment rate is at 17.6%. The number of unemployed people has increased consistently since 2000 and is estimated to be at around 1 million.

In May 2006, over 420,000 people were unemployed in Portugal. The unemployment rate in the country was 7.7%. In 2007 the unemployment rate reached 8.4%, the highest unemployment rate in Portugal since 1987. The average European Union unemployment rate decreased to a record low of 7.3% in 2007. In the Portuguese sub-region of Vale do Ave, the unemployment rate has reached 15%, and in the Península de Setúbal sub-region 12.5%.

Officially, in 2008 the unemployment decreased to 7.3% in the second quarter of 2008.[33] However, it immediately rose again to higher rates. By December 2009, unemployment had surpassed the 10% mark nationwide.

Although being both a developed country and a high income country, Portugal has the lowest GDP per capita in Western Europe and its population has one of the lowest incomes per head among member states of the European Union. According to the Eurostat it had the 6th lowest purchasing power among the 27 member states of the European Union for the period 2005–2007. Maria da Conceição Cerdeira, one of the authors of a published research study made by the Technical University of Lisbon's ISEG (Instituto Superior de Economia e Gestão), explained that "in a generic way, there is not a high intensity of work, or a great psychological pressure" in Portugal, for the mass of common ordinary workers, unlike what happens in Northern Europe or North America. Less pressure does not mean, however, a better job. The last European survey of workers, published in 2007 and which formed the basis of this 2009 research study showed that Portugal is the 5th European country with lower quality of work. 

The first quarter of 2013 signified a new unemployment rate record for Portugal, as it reached 17.7 per cent—up from 16.9 per cent in the previous quarter—and the government predicted an 18.5 per cent unemployment rate in 2014.

In 2008, about 8 per cent of the people with a degree were unemployed, and a much larger proportion was underemployed. This was directly correlated with a general lack of employability and a student's under-preparation for the workplace that was seen among many courses in a number of fields that were offered by certain higher education institutions or departments. The implementation of the Bologna process and other educational reforms, such as the compulsory closing of a number of courses, departments, colleges and private universities after 2005 due to a lack of academic rigour and low teaching standards, was a completely new approach to tackle the problem.[citation needed]

In 2007, some major private universities were investigated by state agencies and two were immediately closed. Additionally, a number of degrees of the public system were also discontinued due to lack of quality, low demand from potential students or scarce interest from potential employers in these fields. Secondary and post-secondary non-higher education (intermediate education—ensino médio), that consists of technical and vocational education, has been redeveloped since 2007 through the governmental policies of the XVII Governo Constitucional (headed by Prime-Minister José Sócrates).[citation needed]

Nearly 100,000 (60,000 in 2008) people with an academic degree are unemployed in Portugal and this group includes a large proportion of young adults.

In February 2013, the graduate unemployment rate is over 35 per cent, while the number of unemployed workers from the manufacturing, construction and energy sectors, among others, rose by 3.6 per cent in the first quarter of 2013.

Andrei-Alexandru Radu

[artigo de opinião produzido no âmbito da unidade curricular “Economia Portuguesa e Europeia” do 3º ano do curso de Economia (1º ciclo) da EEG/UMinho]