With 1,793 km of coastline, Portugal has a long history as a seafaring country and once had colonies all over the world. Brazil, one of its wealthier colonies, became independent in 1822, and all of its African colonies were granted independence in 1975. Its capital city, Lisbon, was almost completely destroyed in an earthquake in 1755, and later, Portugal endured years of revolution and occupation before democratic reforms were put in place in 1974. Portugal is a founding member of NATO and became a member of the EU in 1986. The country is slightly smaller than the U.S. state of Virginia.
Manufacturing in Portugal
Portugal is known for its textiles, clothing and footwear. It also manufactures wood and cork products, paper and pulp, chemicals, fuels, lubricants, automobiles and parts, base metals, minerals, porcelain and ceramics, glassware, technology and telecommunications equipment, dairy products, wine, ships, plastics and optics.
The country’s industrial production growth rate is 3.5%, and industry makes up about 22% of its GDP.
Other Important Industries
Tourism and financial services are important industries for Portugal. Services comprise 75.7% of the GDP and the sector employs 67.5% of the workforce.
Agriculture makes up about 2.2% of the GDP and employs about 8.6% of the workforce. The country is famous for its wines and dairy products, which benefit from the temperate climate that ranges from warm and dry in the south to cool and rainy in the north. Other important agricultural commodities include grain, potatoes, tomatoes, olives, grapes, sheep, cattle, goats, pigs, poultry and fish.
Supply Chain Infrastructure for Manufacturing
Its position between the Atlantic Ocean and its land border with Spain gives Portugal an ideal location for trade within the EU as well as with other parts of the world, and the World Bank Doing Business Dataset gives Portugal a number one ranking for ease of trading across borders.
Portugal has 43 airports with paved runways, so airfreight is simple to manage. The country’s extensive air infrastructure ensures that manufactured goods and raw materials can move quickly to and from all parts of the globe.
Portugal also has more than 3,000 km of rail tracks, nearly 83,000 km of mostly paved roads, 1,344 km of oil and gas pipeline, and a large merchant marine fleet of bulk carriers, container ships, oil tankers and other types of freight ships. This abundance of transportation options combined with Portugal’s ideal location means that it is an easy matter to move goods quickly by any mode.
Even though Portugal’s economy grew rapidly in the late 20th century, it hit a rough patch in 2001. The country entered recessionary territory in 2011 but by 2014, the economy was back on an even keel. However, unemployment reached a high of 18% in 2013. The rate as of 2017 had fallen to 9.7%.
The workforce is well educated. Nearly 95% of the population is literate, and most people complete 16 years of education.
Portugal’s 2017 estimated GDP was $314.1 billion, making it number 55 in the world, and its growth was 2.7%. Because of its earlier economic troubles, the EU required Portugal to take certain measures to ensure financial stability. The country succeeded in exceeding the EU’s requirements and exited the program in 2017.
Portugal exported about $61 billion worth of goods in 2017. Primary trading partners included Spain, France, Germany, the U.K., the U.S. and the Netherlands. The country ranks 47th in the world for net exports. Though, Portugal imports more than it exports, as imports came to around $74.7 billion in 2017.
Portugal’s government is classified as a semi-presidential republic. The president is elected by a majority vote and the term is five years. The next election is scheduled for January 2021. The president appoints a prime minister who is usually the leader of the majority coalition. The cabinet is appointed by the president on the recommendation of the prime minister. The Assembly of the Republic (Assembleia da Republica) has 230 elected seats, four of which represent citizens living abroad.
Portugal was proclaimed a republic on October 5, 1910. Its latest constitution went into effect on April 25, 1976.
Taxes equal 42.9% of the GDP, making Portugal number 29 in the world. The corporate tax and mandatory contributions rate is 39.8%. The tax on profit is 12.5%, while labor and contributions are 26.8% of profit. Portugal also has VAT taxes, taxes on vehicles, property taxes, fuel taxes and taxes on check transactions.
Many of the eight required types of taxes can be paid online. The average time that companies devote to calculating and paying taxes is 243 hours per year.
Starting a business in Portugal is easy when compared to some other countries, although construction permits may take up to 160 days and electrical hookups up to 65 days. Still, these economic times are better for Portugal than those for some nearby countries.
Getting Down to Business
Doing business in Portugal has many advantages and few challenges. Manufacturing output is rising, and educated workers are abundant. Because Portugal has complex tax regulations, QAD Internationalization may be helpful when managing taxes, regulations and other globalization requirements. Manufacturing industries are varied in Portugal, though QAD software and solutions adapt to any style of manufacturing.
How would you describe the state of Manufacturing in Portugal? Learn more about manufacturing and doing business in other great countries around the world.