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Is Portugal richer than Spain?
GDP and growth – The eurozone grew at its fastest rate in a decade in 2017, with a gross domestic product expansion of 2.3%. Both Spain and Portugal stood out in this area. Spanish GDP growth remained strong in 2017, at 3.1%, above the euro area average for the third year running.
For its part, Portuguese economic growth picked up to 2.7% in 2017, as mentioned above. Nevertheless, the size and structure of both economies are notably different. Spain is, according to the most recent FMI estimates, the 15th largest world economy (in PPP terms), with Portugal 55th. In terms of per capita GDP (PPP) the gap is smaller, with Spain ranking 32nd and its neighbour 43rd.
If we go beyond the GDP for comparison, using the Human Development Index, Spain and Portugal are placed 27th and 41st, respectively. Figure 10 shows the comparative evolution of the main growth indicators, reflecting the Spanish boom of the 2000s and the deeper impact of its crisis. Figure 11 helps to better compare the differences in GDP growth and the contributions in each country. Private consumption, net investment and sound exports have been the main drivers of the Spanish economic growth model these past years, also with an important role for the public sector, which is now starting to grow.
Portugal has a less diversified economy, something that the new progressive government wants to improve through a pragmatic approach. In fact, it has followed many of the economic guidelines set by its conservative predecessor, setting up an intensive National Reform Programme to have a more dynamic economy that is attractive to investment and starting to show its effects.
Domestic demand (supported by job creation, wage growth and favourable financing conditions) is strong and tourism remains a major driver, as explained above (accounting for 11% of Portuguese GDP and 8% of employment). Investment growth rose thanks to an upturn in construction and equipment. Figure 12 summarises the accumulated growth in active population, employment and real GDP from 2008 to 2017, as well as the resulting growth in the apparent productivity of labour. The large decline in Portugal’s active population has been a key contributor to the reduction in the country’s unemployment rate. Finally, focusing only on the past two years, despite Portugal’s exceptional achievements, its economic growth has been lower than Spain’s, as shown in Figure 13.
Which country is poorer Greece or Portugal?
Portugal has lost 6% of its purchasing power in the last two years and is the third poorest country in the eurozone. The statistics come from INE, the national statistics institute, which reported last week on the fact that wealth per head is less than 76% of the European average.
Why is crime so low in Portugal?
What makes Portugal the sixth safest county in the world? – Portugal is known to be a stable, safe, and extremely beautiful country. It is even considered one of the safest countries to visit. In fact, the 2022 Global Peace Index ranked Portugal sixth, trailing only Iceland, New Zealand, Ireland, Denmark, and Austria, showing it to be one of the safest countries in the European Union and the safest in Western Europe after Iceland and Ireland.
Additionally, according to the annual internal security report, crime has dropped consecutively for the last seven years. There are many reasons why Portugal is one of the safest countries in the world, making one of the best tourist destinations. One of the key reasons is down to the political climate in the country, which has been stable for years.
In addition to this, Portugal has some of the lowest crime rates out of European countries. You may be aware of the earthquake, the natural disaster, that devastated the country in 1755. While there is always a very small risk of natural catastrophes, in recent years, wildfire dangers in rural areas and flooding have been the only forms of natural disasters.
Why is Portugal poorer than the rest of Western Europe?
This lockdown has allowed me to revisit one of my favourite books, The Year of Living Dangerously by Christopher Koch. I still remember buying it in the 1980s in an old-fashioned bookstore in Fleet Street, back when the “Street of Shame” was still the hub of the British newspaper industry.
The book, later turned into a film starring Mel Gibson, tells the tale of a novice Australian foreign correspondent trying to uncover a communist plot to take control of Indonesia in the mid-1960s. The book, and the film, crackles with atmosphere and fine dialogue. In one particularly memorable exchange, a well-educated, young communist supporter asks the journalist: “Am I a stupid man? Then why should I live like a poor man all my life, when stupid people in your country live well?” It is surely a question that the many hard-working, bright Portuguese, earning low salaries compared to their counterparts in other European countries, ask themselves every day.
For the record, the average monthly wage in Portugal stood at €1,180 per month in 2019, compared to around €4,000 in Germany. Many Portuguese earn far less and try to get by on the monthly minimum wage of €741 a month, less than half the levels seen in Germany (€1,584), the UK (€1,600) or the Netherlands (€1,636).
Low wages, high costs Moreover, Portugal is not a cheap country to live in. The cost of housing, energy, food, and many electronic goods is as high if not higher than in other European countries. So, life for many families is very tough indeed. Why should this be the case? Portugal’s relatively low productivity, the key driver of economic success, is the main reason.
Productivity simply measures output per worker, and countries with high productivity are clearly more efficient at producing goods than low productivity countries, and can thus afford higher wages and salaries. Germany and the US are among the world leaders in productivity – the average German or US worker tends to be more than twice as productive as a Portuguese.
- Various factors, such as adoption of new technologies and business practices, the level of skills in the labour force, and the extent to which the business environment encourages entrepreneurial activity and investment, influence productivity.
- Portugal’s poor productivity reflects low investment in new technologies and, historically, high levels of bureaucracy that have limited entrepreneurship.
In addition, the share of low-skilled workers is one of the highest in Europe (46% in 2017 compared to 17% in the EU). Astonishingly, the lingering effects of the dictatorship, overthrown in 1974, can also be detected, according to some businesses. They have told me that older employees or public servants often shirk responsibility, constantly referring decisions up the chain of command, the legacy of a time when it was best not to raise your head above the parapet.
- Stalling productivity growth Following the revolution in 1974, productivity growth in Portugal grew at a pace similar to that seen in developed economies.
- That allowed living standards to rise and begin to converge with richer economies.
- However, since the mid-1990s, productivity growth has stalled as a result of low investment in information technology, labour market rigidities and the allocation of labour and capital to industries partly dominated by state-owned firms or those less open to competition, according to the economist Ricardo Pinheiro Alves.
Hopefully, the labour market and other reforms, initiated in the wake of the economic crisis, could boost productivity growth in the future. But the IMF believes further reforms are required to make the Portuguese economy more attractive to investors.
A richer future? There are reasons for optimism that Portugal could begin once more to close the gap on wealthier European economies. Portuguese economic growth outpaced both the euro area and the EU 28 over the past four years, bolstered by previous structural reforms. The country is gaining ground as an investment destination in Europe, according to the consultants Ernst & Young, who add that the country is capturing higher quality investment that “prove Portugal’s success in transitioning to a more innovative and knowledge-intensive economy”.
There are other signs that the economy is becoming more dynamic – in 2017, Portugal came second among EU countries in terms of new company formation. The education system is also improving with the average 15-year-old now outperforming their counterparts in other advanced economies in reading, maths and science, according to the OECD.
Moreover, Portugal has one of the highest percentages of English-speakers in the world (among non-native English-speaking countries), a huge advantage given that English is the lingua franca of the business world. Portugal’s high debt burden weighs heavily on the government finances, limiting its capacity for investment, and debt will undoubtedly rise as a result of the economic lockdown.
Hopefully, the economy will recover sharply as the shackles are lifted and proportion of debt to GDP will resume the downward trend seen in recent years. As well as bearing down on debt, the government must do more to encourage foreign investment and, in particular, attract high-tech companies, improve education, reduce bureaucracy and tackle corruption.
- Given the country has one of the best climates in Europe, high numbers of English speakers, good infrastructure, political stability and a reputation as being safe, there is no reason why Portugal could not eventually be the California of the EU, or even the Switzerland of southern Europe.
- That may seem far-fetched.
Yet it simply requires the type of political ambition and determination seen in the Asian tiger economies of Singapore, South Korea and Hong Kong, all of which were poorer than Portugal prior to the 1974 revolution. They are now all much richer. By Anthony Beachey || Anthony Beachey is a former BBC World Service journalist now working on a freelance basis in Portugal, where he specialises in economics and finance.
Is Portugal in the third world?
While Portugal may not be ‘rich’, some bureaucratic processes are very outdated, and pace of life is slower, it is not a third world country. In fact, Portugal is more advanced in a lot of ways than the US (healthcare system, internet infrastructure, banking and payment systems, etc.).
Is Portugal good country to live?
3. The sixth safest country in the world – Portugal is not only a safe country, it is one of the safest countries in the world. According to the 2022 Global Peace Index, Portugal ranked as the sixth safest country in the world, Portugal has one of the lowest crime rates in Europe.
Is there a royal family in Portugal?
7. Teofilo Braga led the provisional government – Teofilo Braga led the provisional government after the revolution and then later was the second elected president of the First Portuguese Republic. Braga was a Portuguese writer, playwright, and politician from the Azores who joined the Portuguese Republican Party in 1878.
