Despite the very real problems the country encountered at the height of the current economic crisis, Portugal has a very positive future to look forward to. The underlying and often unrecognised strengths of the country will prove themselves as the country recovers.
That strength includes the following factors:
Influence, investment and good relations with developing nations who are former colonies
Positive trade balance
A modernised agricultural sector that is boosting exports
A reducing dependence on imported fuels
A stable, homogeneous and non-violent, non-sectarian society
A naturally welcoming and friendly nation / population
Workforce with international experience
Communication and Connection
An increasingly skilled, literate and ambitious workforce
A welcoming approach to immigration
Influence, investment and good relations with developing nations who are former colonies:
For a small European country with a population today of little more than 10 million people, Portugal played a disproportionate role in history around the world. Portuguese is the official language of Portugal, Brazil, Mozambique, Angola, Cape Verde, Guinea-Bissau, and São Tomé and Príncipe. Portuguese has co-official status (alongside the indigenous language) in Macau in East Asia, East Timor in Southeast Asia and in Equatorial Guinea in Central Africa; out of the expansion of the language in colonial times, Portuguese speakers are also found in Goa, Daman and Diu in India.
With approximately 240 million total speakers, Portuguese is usually listed as the seventh most spoken language in the world, the third European language most spoken in the world, the most spoken language in both South America and the Southern Hemisphere, the second most spoken Romance language in Africa (after French) and the most spoken Romance language in Oceania, Japan and Mainland Asia.
The scale of this linguistic advantage globally has obvious benefits for Portuguese business and trade. This is especially important during the current global financial crisis given that most of these historical partners have rapidly developing economies and/or a wealth of natural resources.
Portugal’s Foreign Office has fostered a policy that maintains a good relationship with its former colonies. This eases the extension of positive trade relations.
Furthermore, many Portuguese families and companies have developed and retained significant relationships with these countries. This has the benefit of providing access to a priceless fund of contacts and commercial links.
Positive trade balance:
It is sometimes too easily forgotten that Portugal during the Salazar regime became one of the poorest countries in Western Europe. When democracy returned in the mid seventies, the country was far behind modern states in everything from infrastructure to literacy and education. Basic transport and communication systems were in such dire straits that business and trade were severely disadvantaged. Yet over the past 35 years, the country has been transformed and has fully entered the modern age.
The North, having a tradition of manufacturing everything from shoes and garments to technical parts or equipment and with skilled labour, is riding the wave of producing closer to the markets and guaranteeing quality not found in the cheap labour countries of Asia.
While the crisis has reduced imports significantly, Portuguese companies have increased their presence internationally reflecting the countries modernisation and professionalisation.
Nothing reflects this better than the announcement last year by the Bank of Portugal that Portugal’s overall balance of payments (exports versus imports), turned positive for the very first time since the Bank of Portugal began collecting figures in 1996.
A modernised agricultural sector that is boosting exports:
Improvements in techniques and equipment have seen parts of Portugal’s traditional agriculture transform rapidly. Allied with easier transport, this has opened markets at home and abroad for products previously not exported in large quantity.
An outstanding example has been set by Portuguese wine industry where exports rose nearly 10% in 2012 and over the past 10 years the sector has been growing at a rate of 4.5% per annum. New wineries and a younger generation of enthusiastic winemakers schooled in the modern techniques of taste and quality control are bringing product to the market that is increasingly recognised as remarkable yet still affordable. Modern wine-making equipment, new grape varieties introduced to complement the traditional, more sophisticated labelling and marketing: all are factors which are transforming this industry.
A reducing dependence on imported fuels:
Government efforts to reduce this dependency, particularly on imported coal and oil, have gradually reshaped the country’s sources of power generation and thus upgraded the competitiveness of the Portuguese economy.
Renewable sources of energy, including hydro-electric dams and smaller wind and solar power projects, now account for more than half of the state’s requirements.
This is a remarkable achievement and legislation aimed at liberalising the energy market by opening this former state-owned sector to competition and private investment will continue to boost the strategy for self-dependence.
Related private sector advances include Galp Energia’s recently completed €1.5 billion upgrade to Sines refinery – now one of Europe’s largest – which has enlarged and modernised the facility so that it will not only satisfy domestic demand for diesel fuel but will also allow the country to become a net exporter of the product.
A stable, homogeneous and non-violent, non-sectarian society:
Portugal, even in the turmoil of the debt crisis and still the poorest country in the EU, is seen as being a legitimate member of the European Union: one which has welcomed the development support of the richer nations and has subsequently contributed a voice in European rule. This has given it a stability that brings confidence to investors.
Demographics enhance this confidence as 98% of the population is primarily Catholic/Christian by religion and of the same race. Immigrants are nonetheless generally accepted and welcomed into Portuguese society so that nearly 5% of the current population were born in other countries from all over the world. Naturally, former colonies are well represented, but the diversity of immigration includes the 20,000 Chinese who have been granted residence and many Europeans, old and new, choosing to enjoy the lifestyle and temperate climate.
Workforce with international experience:
At a time when the economy is fragile, the fact that so many young people are willing to emigrate in search of better opportunities reflects the ambition that youth in Portugal have developed. While their leaving is a loss to their society temporarily it can be expected that many will return when times have changed and that they will bring back an increased dynamism and worldliness.
This occurred in the late eighties and nineties when many Portuguese returned with capital and innovative concepts to make their mark on the economy.
Tourism revenues are approaching 10 billion Euros in contribution to the economy. The attractions of the country draw visitors from all over the world, with Lisbon and Porto being one of the top short-stay destinations in Europe, while the Algarve continues to attract visitors for its qualities of climate, safety, outdoor facilities and nature.
Despite the ongoing economic crisis, tourism continues to flourish. While expansion of tourist accommodation and facilities overran forecast demand, the reality is that the tourism sector is still strong and healthy. Increased competition and promotion in ever-expanding markets will foster resurgence in this growth area.
New and growing niche products catering specifically to nature, sports, seniors, medical or well-being tourism are increasingly be marketed. Their attractions are reinforced by Portugal’s strengths of good climate year round, almost guaranteed sunshine for 320 days a year, food known for its freshness and quality and the welcoming nature of the Portuguese.
Leading internet site tripadvisor.com has just voted Lisbon the friendliest city in Europe and one of the top 3 in the world.
Communication and Connection:
Portugal has an internet and mobile phone network (4G was introduced in 2012) that would be the envy of many areas in the USA. Coming late to the table and being a small country it has built a world class system that enables business to work at the forefront of the technological age. This is very much in favour of freelancers, micro and mini companies, which need good connectivity to prosper.
At the same time, new airports and their vastly increased choice of destinations link the country with markets around the world.
An increasingly skilled, literate and ambitious workforce:
Education for the latest generation is creating a new workforce. Eager to improve upon the historical limitations of the dictatorship regime which left most of the country (and thus older generations) semi-literate, the new generations are eager to improve and upgrade their lives.
A background of Anglo/Luso history and a willingness to learn other languages assists both at home and abroad. (This is in contrast to other countries such as France and Spain where their own language is promoted at the expense of foreign languages.) A high percentage of youth now understands and speaks English and many boast not only 2nd but also 3rd languages.
This ambition creates a pool of valuable human resources for any business developing in Portugal.
A welcoming approach to immigration:
Portugal has enacted laws to encourage residency besides others for seniors but as well for those who will contribute to the economy. With a stagnant population growth, immigration is being welcomed to offset the problems of an aging population with a diminishing youth to support it.
Rapid development in all technologies across the country has impacted the medical services so that the most modern facilities can now be found in Portugal. Many doctors and staff have taken some time to study and research abroad and are increasingly acknowledged for their capacities and competence.
National health facilities have been supplemented with private hospitals: the success of the latter eases the pressure on the national services. This availability of health care is a benefit to residents and visitors alike.
Portugal will recover from the current crisis in due course and will do so robustly thanks to the above factors. That the country is now preparing to go back to the bond markets on the expectation of good take-up at reduced costs reveals renewed confidence that the market is taking on the Portuguese future.