Economic Analysis


Population 10,4 million
GDP per capita 22,123 US$
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major macro economic indicators

  2013 2014 2015  2016(f)
GDP growth (%) -1,1 0,9 1,5 1,3
Inflation (yearly average) (%) 0,4 -0,2 0,6 0,7
Budget balance (% GDP) -4,8 -7,2 -4,4 -2,9
Current account balance (% GDP) 1,5 -0,1 0,5 -1,0
Public debt (% GDP) 129,7 130,2 128,8 127,9


(f) Forecast


  • Quality infrastructure
  • Tourist attractiveness
  • Sector and geographic diversification initiated, research and innovation capacities
  • Declining labour unit costs and reforms


  • Limited scale of the manufacturing industry, specialisation in sectors with low added value (textile-clothing. mineral products and metal ores. metals. food products)
  • High level of public and corporate debt
  • Rigid labour market and limited domestic competition, low investment
  • Deteriorating bank asset quality and profitability


Growth steadies

After three years of recession, Portugal returned to growth in 2014 and should record its third successive year of growth in 2016. This growth however is likely to slow slightly. Although the country is feeling the benefits of a favourable economic environment thanks to the weak euro, low oil prices and accommodative monetary policy of the ECB, its economy continues to be burdened by the scale of its public and private debts. Household consumption, the main driving force for the economy, should slightly weaken. In the context of subdued growth of nominal wages, high unemployment and low energy prices, price pressures would remain weak. Inflation is expected to remain stable in 2016, in the context of commodity prices still moderated and headline inflation near 1%. Private demand however will weaken as a result of a slight decline in confidence with the rise in political instability and investments are expected to contract again because of reduced credit. In effect, investor confidence, after reaching a peak in April 2015, its highest point since 2008, has been slipping ever since. Therefore, despite the increased production capacity utilisation rate and lower corporation tax investment is expected to decelerate in 2016. After the negative contribution of exports to growth in the first quarter of 2016, the latter is likely to remain weak reflecting the modest recovery expected in the Euro Area (leading trading partner), the impact of Brexit, as well as the sharp slowdown of Angola’s growth.


Corporate debt remains high and the rise in non-performing loans is hitting bank profitability

Insolvencies which mainly involved domestic market oriented SME sector, rose slightly in 2015 after falling significantly in 2014. This upward trend is continuing on the first months of 2016.

Whilst slightly lower, corporate debt remains high (125% of GDP at the end of 2014) and is a drag on investment. The banking sector has improved its solvency and is benefiting from better financing terms, but the growth in non-performing loans is undermining its profitability and limiting its ability to lend to viable companies. Moreover, a small bank (Banif) that is majority owned by the state recently failed, which has cost the public treasury more than €2bn, contributing to widen the public deficit to 4,4% of GDP in 2015, while the government was supposed to bring it to 2.5 % (excluding one-off expenditures the deficit is at 3%). Although it registered an excessive budget deficit in 2015, the European Commission will not fine Portugal, but the country could be sanctioned by a reduction in European aids. However, the public deficit should decrease in 2016, as the government implemented consolidation measures in the budget, in order to be consistent with the Stability and Growth Pact.

Finally, public debt remains high, debt to GDP ratio is expected to moderately decline, and the burden of public debt and the scale of the financing needs of the government continue to pose significant risks for the viability of this debt, with a dynamic that remains highly sensitive to macro-economic shocks.

In 2015, ECB stress tests highlight that Novo Banco does not own the sufficient level of capital requirements. To address this issue the Central Bank of Portugal announced the sale of Novo Banco, which must be done before August 2017, or should be liquidated, but the central bank struggles to find buyers. However the closer we get to this date, the more difficult it will be to negotiate a reasonable price. Furthermore, the Portugal negotiates with European authorities in order to recapitalize the biggest Portuguese bank, Caixa, for at least 2 billion of euros.


An increasingly fragile political context

The Social-Democrat Party (SDP) won the parliamentary elections on 4 October 2015 but without an absolute majority. After negotiations lasting a number of weeks, the previous President, Anibal Cavaco Silva (SDP) confirmed the Prime Minister, Pedro Passos Coelho (SDP), in office. However the left (Socialist and Communist Parties and the left block) united for the first time in 40 years and placed a censure motion before Parliament, leading to the fall of the government on 10 November.

On 24 November, after asking the Socialist Party (SP) for guaranties on the stability of a future government as well as clarifications on compliance with the country’s budgetary commitments, the President was obliged to name the leader of the SP, Antonio Costa, as Prime Minister. However, the parliamentary left-wing coalition does appear fragile, with the allies of the SP calling for the end of the austerity policies (end of the freeze on pensions and a gradual raising of the minimum wage over four years). Marcelo Rebello de Sousa, conservative candidate, was elected on the first round of the presidential election, in January 2016.  The new President rejected the possibility of dissolving the Parliament. Nevertheless, disagreements over the 2017 budget could trigger a return to the polls in 2017, resulting in a new period of political instability. 

Finally, Portugal will be weakened by structural limitations (low level of investment, high level of debt and bottlenecks) that make it necessary to continue with reforms. Although progress has been made in this area, Portugal continues to lag behind relative to its peers in terms of labour flexibility and internal competition. The efficiency and the discipline of the public sector in terms of payments needs improving, as well as the operation of the insolvency process and the procedures for restructuring corporate debts.


Last update : July 2016



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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