Economy of Portugal

Portugal is a market economy with its per capita output now standing at 69% of the European Union average. It is a country with a relatively wide income distribution and a large low-wage sector. There is a high incidence of working poverty, especially among single-earner couples. [1] As of May 2006, over 429,000 people were unemployed in Portugal. The unemployement rate in the country was 7,7%.

A Labour Law published in December 2003 increased the flexibility of working arrangements, although it has yet to prove its role in decreasing unemployment, especially among the youngest and the oldest of working-age population. The current administration is committed to expand market liberalisation, privatisation, and deregulation of the economy and simplifying the admistrative burden on companies. It is also committed to promote investment in research and information technologies to improve productivity and competitiveness.

Industrialisation boomed in the 1950s with Salazar's regime, leading to an average of 6% annual growth of the GDP between 1959 and 1963, 7% between 1965 and 1967, after dropping to 5.2% in 1964. Due to international crisis, the growth largely stopped. Since 1985, the country started its modernization in a very stable environment (1985 - to the present day) and it joined the European Economic Community in 1986. Successive governments have implemented various reforms and privatised many state-controlled firms and liberalised key areas of the economy, including the financial and telecommunications sectors. Portugal developed an increasingly service-based economy and it was one of the eleven founding countries of the Euro in 1999, with very restrictive criteria, and began circulating the new currency on January 1, 2002 along with eleven other EU members.

A considerable part of continental Portugal is dedicated to agriculture, although it does not represent most of the economy. The south has developed an extensive monoculture of cereals and olive trees and the Douro Valley in vineyards. Olive trees (4,000 km²; 1,545 sq mi), vineyards (3,750 km²; 1,450 sq mi), wheat (3,000 km²; 1,160 sq mi) and maize (2,680 km²; 1,035 sq mi) are produced in vast areas. Portuguese wine and olive oil are especially praised by nationals for their quality, thus external competition (even at much lower prices) has had little effect on consumer demand, a situation that does not occur with other products. Portugal is a traditional wine grower, and has exported its wines since the dawn of western civilization; Port Wine and Vinho Verde (Green Wine) are the leading exporters. Portugal is also a quality producer of fruits, namely the Algarve oranges and Oeste region's Pera Rocha (a type of pear). Other exports are horticulture, floriculture, beet sugar, sunflower oil, and tobacco.

Natural resources such as copses cover about 34% of the country, namely pine trees (13,500 km²; 5,200 sq mi), cork oak (6,800 km²; 2,625 sq mi), holm oak (5,340 km²; 2,060 sq mi), and eucalyptus (2,430 km²; 940 sq mi). The large-scale growing of eucalyptus for the paper and woodchip industries has been controversial, as eucalyptus trees have very deep roots, and lead to a lowering of the water table. This has been a contributory factor in the high rate of arson, as failing farmers vent their frustrations. Cork is a major export, Portugal produces half of the world's cork. Significant mining resources are tungsten, tin, and uranium.

The major industries are the textile, footwear, leather, furniture, ceramics, and cork. Modern industries have developed significantly, including: oil refineries, petrochemistry, cement production, automotive and ship industries, electrical and electronics industries, machinery and paper industries. Portugal has an ambitious and well-planned complex of petrochemical industries in Sines where the biggest oil refinery of the Iberian peninsula will be built. Automotive and other mechanical industries are located in Setúbal, Porto, Aveiro, Braga, Santarém, and Azambuja.

Portugal's balance of trade is negative. It buys mostly in the European Union from: Spain, Germany, France, Italy, and the United Kingdom. It also sells most of its products within the union to: Germany, Spain, and France mostly.

Portugal is trying to develop a cultural and rustic tourism, rather than only beach tourism, in order to attract more affluent tourists often concerned in getting to know the real Portugal. The interior of the nation has a decreasing population, but exceptional touristic potential. The Algarve, with its different beaches has been the primary attraction for decades, but it has suffered from mass tourism, and the authorities have been working to recover the 1960's Algarve, namely recovering the coast and demolishing illegal urbanizations. Mass tourism has caused some ecological damage in the Algarve, for example water shortages. The Lisbon area has recently become a very popular destination, mostly due to the city of Lisbon urban historical attractions, but also due to Sintra's fabled palaces and castles located in very romantic and exotic scenery. The island territories of Madeira and the Azores also have a growing potential.

Agriculture
More than half (50,8%) of continental Portugal is dedicated to agriculture. The north has a miscellaneous agricultural type (except for the Douro Valley), while the south has developed an extensive monoculture on cereals and Olive trees. Wheat (3,000 km²) and corn (2,680 km²) are produced in vast areas, followed by barley, potato, and rice. Larger plantations are the vineyard with 3,750 km², but the olive trees have the larger area of about 4,000 km², namely in Estremadura and the Algarve, mostly for production of olive oil. Portuguese olive oil is specially appraised by nationals. Portugal also has a significant production of fruits, namely oranges (the Algarve ones are very appreciated), pears ("Pera Rocha" is a notable pear from the Oeste region), apples, almonds and walnuts. Among other productions such has horticulture, floriculture, beet sugar, sunflower oil, and tobacco.

Natural resources
Natural resources, such has copses cover about 34% of the country, namely pine trees (13,500 km²), cork oak (6800 km²), holm oak (5,340 km²), and the eucalyptus (2,430 km²). Cork is a major production, Portugal produces half of the world's cork. Significant mining resources are tungsten, tin, and uranium.