Economic Analysis


Population 10,3 million
GDP per capita 19,821 US$
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major macro economic indicators

Main economic indicators 2015 2016 2017(p) 2018(f)
GDP growth (%) 1.8 1.5 2.6 2.1
Inflation (yearly average, %) 0.5 0.6 1.6 1.9
Budget balance (% GDP) -4.4 -2.0 -1.4 -1.4
Current account balance (% GDP) 0.1 0.7 0.4 0.3
Public debt (% GDP) 128.8 130.1 126.4 124.1

(f): forecast


  • High-quality infrastructures
  • Tourist destination
  • Beginning of sectoral and geographic diversification of exports, research and innovation capacities
  • Lower labour costs and reforms implemented


  • Limited size of its manufacturing industry, specialisation in low and medium added value areas (fuels, food products, chemical products, vehicles, clothing and metals)
  • High levels of public and private debt
  • Inflexibility of labour market and lack of internal competition, low levels of investment
  • Decline in the quality of bank portfolios
  • Youth unemployment rate at 25%
  • Slow-functioning legal system


Slight slowing of growth in 2018

The positive eurozone economic situation continues to help boost the Portuguese economy, which benefited from increased external demand and a recovery in investment in 2017. Companies have replaced capital equipment in order to satisfy the growth in demand, while the production capacity utilisation rate returned to close to that of 2008. The growth in exports was confirmed during the year and there was an increase in the market share captured by equipment exports. Exports of services were in turn boosted by a rise in the numbers of tourists. These two growth drivers have made up for the reduced contribution to growth from household consumption which, whilst positive, has tended to slow since 2016.

Activity will likely gradually slow during 2018. The increase in employment and the reduction in taxes on middle class households will help sustain consumption, while investments by companies will be restrained by higher corporation taxes. Public investment is, however, expected to take the strain: the 2018 budget forecasts a +0.4 GDP point increase in this. Despite the slowdown expected in the United Kingdom and Spain, exports should remain strong, – notably automotive exports, which will be boosted by the increase in production capacity at Autoeuropa. The company should reach a production capacity of 200,000 units in 2018 (85,000 in 2016). Unemployment should continue downwards to reach 8.6% in 2018.

The uptick in growth in 2017 was positive in terms of company insolvencies, which - despite recording a significant reduction – remain at pre-crisis levels. The deleveraging process for the private sector is continuing, but the level of company indebtedness is no lower (137% of GDP in September). The banking sector is also extremely fragile. Low profitability, as a result of the high level of bad debt, will continue to slow the internal recapitalisation of the banks. This will restrict their abilities to lend to viable companies. While the credit situation for companies remains weak, with companies preferring self-financing, the situation for households is improving.

Continuation of budgetary consolidation

The improved economic situation, the reduction in the cost of servicing the debt, and reduced public investments made it possible to reduce the public deficit to 1.4% in 2017, 0.6 percentage points below that in 2016. With the public accounts under control, the country was able to officially end the excessive debt procedure initiated by the European Union in 2009. In addition, the favourable market borrowing conditions and investment spending below the level forecast in the budget enable the government to make an early reimbursement of an instalment of USD3bn to the IMF. In 2018, budget policy is expected to be more expansionary which earned the Portuguese government a rebuke from Brussels with the presentation of the budget. The government plans to cut taxes for middle income households and raise taxes on companies. The differential will also be made up by means of new taxes on consumption (taxes on cured products). Capital expenditure is expected to rise whilst current spending should contract. The public deficit will stabilise whilst remaining above the 2% mark. Although the primary balance is expected to remain in surplus, the reduced cost of debt made possible thanks to low interest rates (2.8% in 2018) should help reduce the cost of the debt servicing.

As a consequence of the upgrading of the country by Standard and Poor’s (S&P) from “BB+” to “BBB-”, Portugal was taken out of the “junk” investment category in which it had been placed back in January 2012 and should see a reduction in the yields of government bonds. The level of the public debt however remains high but is on a downwards trajectory that is expected to accelerate in 2018 and reach 124.1% (6 pp less than in 2016). In addition, whilst under control, the scale of the debt gives rise to concerns about its viability which depends in part on its eligibility for the European Central Bank’s purchase programme. The announcements from the Central Bank seem to be indicating a gradual reduction in the volume of asset purchases. In 2018, this should drop from EUR 60 bn to EUR 30 bn.

The current account balance will remain at equilibrium, underpinned by the vitality of manufactured exports and tourism which will offset the increase in energy and capital goods imports.

The leftist coalition holds firm

The municipal elections of 2017 confirmed the strength of the Portuguese left following a difficult year for the government of António Costa. The leftist coalition which includes the Socialist Party, the Communist Party and the Green Party, was shaken by a number of scandals involving several of the government’s Secretaries of State. The Galpgate scandal named after the oil company that had invited three Secretaries of State to Paris to watch European Championship football matches brought about a ministerial reshuffle. At the same time, the tragedy of the Pedrogão fire that resulted in the death of 64 people and more than 250 injured, also damaged the government’s popularity. The Prime Minister has however so far succeeded in managing people’s expectations by ending the austerity programme, whilst continuing to comply with the commitments made to the European Commission, although his political are pressing for a negotiated debt reduction, which could make the job of the executive much more complicated. 


Last update : January 2018



Cheques too widely used and it is common to establish payment plans with post-dated cheques. They are payable on presentation and, if the bank account is not provisioned, they borne by the bank until the maximum amount of 150,00 € . In the case of bounced cheques, a individual person or a company is inhibited of receiving and issuing further cheques until the maximum term of two years (or, by court decision, by the maximum period of six years).


Bills of exchange are commonly used for commercial transactions inPortugal. In order to be valid, however, they are subject to stamp duty whose rate is set each year in the country's budget. The current rate of stamp duty is 0.5% of the amount of the bill, with a minimum of one Euro.

A bill of exchange is generally deemed independent of the contract to which it relates.


While creditors, in the event of payment default, are not required to issue a protest notice before bringing an action to court, such a notice can be used to publicise payment default and pressure the debtor to honour his obligations, albeit belatedly.


In the event of default, cheques, bills of exchange and promissory notes offer effective guarantees to creditors as they are enforceable instruments in law and entitle holders to initiate “executory proceedings”. Under this process, creditors may petition the court to issue a writ of execution and notify the debtor of such an order. Where the debtor still fails to pay up, creditors may request the court officer to issue an attachment order against debtor’s property.


Electronic transfers via the SWIFT network are also widely used by Portuguese companies and are a quick, reliable and cheap way of payment.


If the buyer fails to order a transfer, the legal remedy consists in instituting ordinary proceedings, or summary proceedings based simply on an unpaid invoice.


Debt collection


Out-of-court collection starts with the debtor being sent 4 demands for the payment of the principal amount. Interests can be requested to debtor but are normally difficult to collect inPortugal.


Since 1st October 2004, interest rate set henceforth by decree of the Treasury Department, will be published in theDiário da República during the first fortnight of January and July each year and be applicable for the six coming months. Unless the parties have agreed different interest rates in their commercial agreement, the default interest rates to be considered are the above mentioned


The order to pay procedure (Injunção) applicable to commercial claims considered uncontested – and, since 19 March 2003, whatever the amount involved – is heard by the court in whose jurisdiction the obligation is enforceable or the court where the debtor is domiciled. Since September 2005, the injunction may be served as an electronic file.


The National Injunctions Office (Balcão Nacional de Injunções / BNI) located inOporto, has exclusive jurisdiction throughout the country with the electronic processing of the order to pay procedure.


Such action must be performed under electronic form when it is instituted by a lawyer.

Now, the majority of orders to pay procedure are electronically submitted to the BNI.


For disputed claims, creditors may initiate formal and costly “declarative proceedings” (acção declarativa), to obtain a ruling establishing their right to payment. They must then initiate the "executive proceedings" (acção executiva) to enforce the court’s ruling.


Under the revised Code of Civil Procedure, any original deed established by private seal (i.e. any written document issued to a supplier) in which the buyer unequivocally acknowledges his debt is henceforth deemed an instrument enforceable by law. Since the 1st of September 2013, with the recent revision of the Code of Civil Process, the written signed payment plans can no longer be used to initiate “executory proceedings” unless they are recognized by notary.


Recourse in civil matters allows the judge to adapt the procedure to the needs of each case and accelerate the pace of the proceedings.

As well, a decree-law seeks to improve the process of the executive proceedings by suppression of some procedural formalities and by a better distribution of tasks between the judge of execution and the servant of execution (agente de execução).


In the scope of the recent restructuring of the courts in Portugal since 01 September of 2014, it was created more courts specified in commercial issues. The Courts of first instance were reduced to 23 Courts (in each capital of district) and there are 21 sections specialized in commercial issues called“secção de Comercio” (Secções de Competência Especializada).  These sections deal specifically with insolvencies and matters related to commercial companies. It was created too 16 sections specialized in Enforcement Procedures (“Secções Especializadas”).

insolvency trend Portugal 2015
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