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Country Risk: Portugal

Flag of Portugal

Full Name: Portuguese Republic

Internet Domain: .pt
International Dialing Code: +351

Table of Contents

General Information Location and Size Government
Legal System Interesting Facts Economy
Comparative Indicators Credit and Collections Risk Assessment
Business Climate Business Protocol Other Sources of Information


Location and Size

Portugal is part of the Iberian Peninsula which is located in southwestern Europe. It borders the North Atlantic Ocean on the west and Spain to its east. Its territory covers a total of 92,090 sq. km., which includes the Azores and Madeira Islands, making it slightly smaller than the U.S. state of Indiana. The capital, Lisbon, is a port city located in western Portugal on the Atlantic Ocean and the Tagus River.

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Portugal is a republic governed as a parliamentary democracy comprised of 18 districts.

Branches of Government:

  • Executive: Chief of State – President Marcelo REBELO DE SOUSA (since 2016); Head of Government – Prime Minister Antonio Luis Santos da COSTA (since 2015); Cabinet – Council of Ministers appointed by the president on the recommendation of the prime minister.
  • Legislative: Unicameral Assembly of the Republic (230 seats; members elected by popular vote to serve four-year terms).
  • Judicial: Constitutional Court; Supreme Court; Audit Court; Supreme Administrative Court.

Legal System

Portugal has a civil law system.  Legislative acts are subject to the review of a Constitutional Tribunal.

Portugal has accepted compulsory International Court of Justice (ICJ) jurisdiction. (What does this mean?) Portugal accepts International Criminal Court (ICCt) jurisdiction.

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Nine Interesting Facts About Portugal

  1. Lisbon is the oldest city in Western Europe.
  2. Portugal’s Vasco de Gama Bridge is the longest bridge in Europe, spanning 10.7 miles.
  3. Portugal has been part of the EU for almost 20 years.
  4. Portuguese explorer Bartholomew Dias was the first to sail around the tip of Africa, which he named the Cape of Good Hope; Ferdinand Magellan was the first to circumnavigate the globe; Vasco de Gama discovered a sea route to India in the 1490s; and Pedro Alvarez Cabral discovered Brazil.
  5. It has been illegal to kill a bull in Portuguese bullfighting since the 18th century.
  6. Estoril Casino, near Lisbon, opened its doors in 1920 and is one of the largest gambling centers in Europe.
  7. Portugal is home to the first commercial wave farm, which creates and sells electricity. The farm was constructed in 2006.
  8. During the time of the Roman Empire present day Portugal was known as Luisitania.
  9. Portugal is most famous for its Port Wine and Salted Cod.

Map of Portugal

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Since it joined the European Community (predecessor of the EU) in 1986, Portugal’s economy has become increasingly service-based and diversified. Successive governments have privatized many state-controlled firms and liberalized key areas of the economy.

Nevertheless, precipitated by the collapse of foreign demand and restrictive financial conditions affecting all the sectors of the economy, Portugal has been suffering from a deep recession since 2009. While a 2012 IMF review detected progress in implementing necessary reforms, the economy’s main danger appears to be external and is linked to the ongoing crisis in the Eurozone.

In its favor, Portugal’s economy is supported by good logistics and communications infrastructure and a modern manufacturing industry made up of small and medium-sized companies.

However, challenges still remain as the result of heavy dependence on the European economic situation, inadequate innovation efforts, lack of skilled labor, and high levels of public and private indebtedness.

Leading Markets (2017): Spain 25.2%, France 12.5%, Germany 11.3%, UK 6.6%, US 5.2%

Leading Exports – Commodities: Agricultural products, food products, wine, oil products, chemical products, plastics and rubber, hides, leather, wood and cork, wood pulp and paper, textile materials, clothing, footwear, machinery and tools, base metals.

Leading Suppliers (2017): Spain 32.0%, Germany 13.7%, France 7.4%, Italy 5.5%, Netherlands 5.4%

Leading Imports – Commodities: Agricultural products, chemical products, vehicles and other transport material, and optical and precision instruments, computer accessories and parts, semi-conductors and related devices, oil products, base metals, food products, textile materials

Top Industries: Textiles, clothing, footwear, wood and cork, paper, chemicals, auto-parts manufacturing, base metals, porcelain and ceramics, glassware, technology, telecommunications; dairy products, wine and other foods; ship construction and refurbishment; tourism

Top Agricultural Products: Grain, potatoes, tomatoes, olives, grapes; sheep, cattle, goats, pigs, poultry, dairy products; fish

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Comparative Economic Indicators ” 2018

Portugal France Germany Italy Spain Switzerland
Population (millions) 10.35 67.36 80.45 62.24 49.33 8.29
Population growth rate (%) -0.27 0.37 -0.17 0.16 0.73 0.68
Age Structure (%)
(15 to 64 years old)
65.73 27.7 64.81 64.72 66.48 66.45
Age Structure (%)
(65+ years old)
20.26 19.82 22.36 21.69 18.15 18.34
Literacy (%) 95.7 99.2 98.3
Unemployment rate (%) 8.9 9.4 3.8 11.3 17.2 8.1
Inflation (%) 1.6 1.2 1.7 1.3 2.0 0.5
Population below poverty line (%) 19.0 14.2 16.7 29.9
GDP** (USD billions) 314.1 2,856.0 4,199.0 2,317.0 1,778.0 523.1
GDP real growth rate (%) 2.7 2.3 2.5 1.5 3.0 1.7
GDP per capita** (USD) 30,500 44,100 50,800 38,200 38,400 62,100
Public debt (% of GDP) 125.7 96.8 63.9 131.8 98.4 41.8
Industrial production growth rate (%) 3.5 2.0 3.3


4.0 3.4
Exports (USD billions) 61.0 549.9 1,434.0 496.3 313.7 313.5
Imports (USD billions) 74.7 601.7 1,135.0 432.9 338.6 264.5
Reserves of foreign exchange and gold (USD billions) 26.1 156.4 200.1 151.2 69.41 811.2
Currency Euro
Exchange rates (per USD) 03/13/2013 n/a n/a n/a n/a n/a 0.98
Exchange rates (per EUR) 03/13/2013 0.90 0.90 0.90 0.90 0.90 1.09
Rating in 2018 Corruption Perceptions Index*** 6.4 7.2 8.0 5.2  5.8 8.5
Rating in 2019 Index of Economic Freedom*** 65.3 63.8 73.5 62.2 65.7 81.9

** PPP ” Purchasing Power Parity
*** 2018 Corruption Perceptions Index: 80-100=Clean; 0-39=Corrupt
**** 2019 Index of Economic Freedom: 100-80 = Free; 49.9-0 = Repressed

Economic Data from CIA World Factbook

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Credit and Collections

Collecting in Portugal

Portuguese Statutes of Limitations:

  • Open Account: 3 – 15 years
  • Promissory Notes: 5 – 20 years
  • Written Contracts: 5 – 20 years
  • Oral Agreements: 5 – 20 years (if it’s considered valid)

Dispute Resolution

The Portuguese legal system is slow and deliberate, with many cases taking years to resolve. In an effort to address this problem, the previous government introduced reforms in litigation procedures and public administration in 2007. These reforms were intended to reduce delays in the justice system and improve efficiency by reorganizing the court system and redefining court jurisdictions. The system, however, remains hampered by a bloated judiciary, inexperienced personnel, and an appointment system based on patronage. The current government is implementing further judicial sector reform, as mandated by the EU/IMF bailout agreement, to improve efficiency, provide arbitration and mediation mechanisms, and simplify the bankruptcy law.

Risk Assessment

Coface Country Rating: B — Political and economic uncertainties and an occasionally difficult business environment can affect corporate payment behavior. Corporate default probability is appreciable.

Coface Business Climate Rating: A2 — The political and economic situation is good. A basically stable and efficient business environment nonetheless leaves room for improvement. Corporate default probability is low on average.

Credendo Political Risk Rating: 2 — Fairly Low
Credendo Commercial Risk Rating: C — High

The Belgian Export Credit Agency (ONDD): Risks on Export Transactions

  • Political Risk – Short Term <2 years: 2 — Fairly Low
  • Political Risk – Medium-Long Term >2 years: 1 — Low
  • Commercial Risk: C — High

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Business Climate

Eighty percent of Portugal’s businesses are SMEs that live off the domestic market. Weakened by low profitability, weak capacity for self-financing and high debt level, these enterprises have been hit hard by the collapse of growth and of consumption. Lack of vitality in the Eurozone has negated any possibility of exports offsetting this contraction.

Bankruptcies, which had already risen by 33% in 2011, have reached historic levels with the construction and trade sectors being particularly hard hit. Developing niches, particularly in tourism, food processing and international logistics may hold the key to developing recovery-driving sectors within the economy.

Portugal does offer a favorable investment environment with low political risk and no political violence. Reasonable labor costs, a year-round temperate climate, a highly skilled and English-fluent labor force in the areas of finance and information technology, and a low level of corruption also make the country attractive to investors.

Nevertheless, Portugal continues to attract foreign investors and the government has launched an economic diplomacy strategy focused on boosting exports and foreign direct investment through its diplomatic missions overseas.

Economic Freedom: Based on the 2019 Index of Economic Freedom, Portugal’s economic freedom score is 65.3, making its economy the 62nd freest in the 2019 Index.  Portugal is ranked 30th out of 43 countries in the Europe region, and its overall score is above the world average.

Market Access: In accordance with its membership, Portugal applies European Union rules regarding trade. While the EU has a rather liberal foreign trade policy, there are a number of restrictions, especially on farm products. Following the implementation of the CAP (Common Agricultural Policy) aimed at favoring the development of agriculture within the EU and the application of compensations on import and export of farm products, there are a number of control and regulation systems applicable to these goods entering EU territory.

Portugal maintains a free zone/free port in the autonomous region of Madeira authorized in accordance with EU rules or incentives granted to member states. Industrial and commercial activities, international service activities, trust and trust management companies, and offshore financial branches are all eligible to conduct business in the zone. Companies established in the free zones enjoy import/export-related benefits and tax incentives.

Regulatory System: In the past few years, Portugal’s Ministry of Economy has promoted various initiatives to improve government efficiency. Working with the Ministry of Justice in 2007, it launched the “Cutting Red Tape” website, a resource containing information on measures taken since 2005 to reduce bureaucracy in the incorporation, registration, certification, liquidation, dissolution, and merging of businesses in Portugal. Other initiatives include the “Empresa na Hora” (On-the-Spot Company), which allows for the incorporation of companies in less than one hour at Corporate Formalities Centers and Business Registration Offices. Other services provide online company incorporation, labor mediation, bilingual commercial registration, patents, and trademarks.

Intellectual Property Rights: In 2003, the government adopted the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and provisions of the General Agreement on Tariffs and Trade (GATT). Portuguese legislation for the protection of intellectual property rights has been consistent with WTO rules and EU directives since 2004.

Exchange Control: Portugal does not maintain any currency or capital account restrictions. It joined with nine other European countries to form the European Monetary Union in 1999. And followed in 2002, by introducing  the euro as its official currency, replacing the Portuguese escudo.

Corruption: Corruption plays a limited role in Portugal’s business culture. Although U.S. firms occasionally encounter limited degrees of corruption in the course of doing business in Portugal, they do not cite corruption as an obstacle to foreign direct investment.

Political Violence: There have been no incidents involving politically motivated physical damage to projects and/or installations and potentially destructive civil disturbances are not likely.

For more detailed information on these topics, visit the 2018 Investment Climate Statement – Portugal, U.S. Department of State

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Business Protocol in Portugal

  • Be aware, business relationships are built with people not companies. So if you change representatives or people on a negotiating team once negotiations have started, the relationship-building process will have to begin again.
  • The Portuguese prefer face-to-face meetings to written or telephonic communication, which are seen as too impersonal.
  • If your Portuguese business colleagues have questions or want clarification during a presentation, they will wait until you have finished speaking and not interrupt.
  • Although honest, the Portuguese do not volunteer information unless solicited, especially if remaining silent is in their best interest.
  • Agendas serve as starting points for discussions; they do not serve as schedules.
  • Presentations should be well thought-out, thorough, and backed up with charts and figures.
  • Have printed material available in both English and Portuguese.
  • Portuguese business is hierarchical. The highest-ranking person makes decisions.
  • Women (and often men), are clothes brand conscious and will usually dress well. Conservative dress is usually the best choice. This can include pants for women if part of a suit. Long sleeved shirts are important, especially for men. Only the stylishly unaware would consider wearing a short sleeved shirt with a tie.
  • Punctuality is not an important cultural trait. It is courteous to arrive five minutes late and definitely bad news to arrive before the agreed time.

More information on Business Protocol: Kwintessential

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Sources for further information on doing business in Portugal

AmCham Portugal

Doing Business in Portugal, Financial Times

Doing Business in Portugal,

Embassy of Portugal to the United States

United States Embassy in Lisbon, Portugal


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This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries including Portugal. For further information, contact [email protected].

This report represents a compilation of information from a wide variety of reputable sources.

Comparative Economic Indicators: CIA World Factbook

Risk Assessment information: Coface Country Rating, Ducroire/Delcredere and Political Risk Insurance Center.

Exchange Rates: The Currency Site.