€6.5 Million to Be Spent Boosting Tourism in the Algarve

A plan worth €6.5 million has been approved to help boost tourism within the Algarve area. Around €4.3 million is to be invested in direct flights to Faro airport. These direct flights are to be promoted through joint campaigns with travel operators and airlines, and the general intention is to promote the Algarve to strategic markets worldwide next year.

These include Canada, France, Austria and Scandinavia as well as more traditional markets such as Britain, Belgium, Ireland and Germany. There is also to be an attempt to reinforce markets within Russia, Poland and Spain. The main aim of this plan is to boost the number of nights spent by tourists in the Algarve outside the height of the tourism season.

The neighboring region of Alentejo is also to promote its resources which are very similar to that of the Algarve. It’s hoped the two regions will work together, as someone staying in one region could be interested in lengthening their stay to explore the neighboring region which would prove beneficial for everyone. A major aim of the plan is to promote the relationship between the Algarve and the Alentejo regions, in the hope of attracting new markets and expanding existing ones.

There is to be an investment of €200,000 which will mainly be funded by the EU, to help consolidate the partnership between the two regions, although each region will contribute €15,000 towards this project. The project will take place over the next couple of years, and will include plans to produce a booklet detailing walking and cycling trails, eco-trails and bird watching as a way of boosting tourism.

 

Portuguese President Highlights Importance of Tourism

The Portuguese president, Anibal Cavaco Silva has highlighted the importance of the tourism industry to the country. He recently met with UNTWO secretary general, Taleb Rifai, and the president and CEO of the World Travel and Tourism Council, David Scowsill. Tourism in Portugal directly accounts for 9% of the country’s GDP, and is responsible for employing around 8% of the workforce.

The meeting served to highlight the importance of this sector, and especially the effects it can have within other sectors of the economy. With this in mind the direct and indirect influence of tourism in Portugal is expected to account for 15% of the country’s GDP, and to directly and indirectly support 18% of the workforce this year.

The Portuguese tourism industry hasn’t been immune to the effects of the euro crisis, as during the first nine months of this year the revenue from this sector dropped by around 2%, even though there was a 3% increase in the number of visitors to the country. More than 6.2 million foreigners visited Portugal during the first nine months of this year, but perhaps not surprisingly there were fewer Portuguese travellers.

However last year saw record numbers of people visit the country and revenue from the hotels increased to reach nearly €2 billion, the highest level since 2008. Even though Portugal is facing something of a crisis at the moment, it is still an extremely popular holiday destination and buy to let property is perennially popular, especially in the coastal resorts that benefit from a temperate climate year-round.

Low Carbon Energy Production – Portugal is Walking It

Although the Portuguese economy might not be doing so well, Portugal does score very highly in one particular sector. Portugal is streets ahead of other countries in producing renewable power, and around a quarter of its electricity is generated in this way, something that is likely to save the economy €9 billion over the next 20 years.

Renewable energy resources, especially wind farms, are cutting energy bills and reducing the carbon footprint of Portugal while in comparison Germany recently announced it is to build 10 new coal-fired power stations to replace nuclear power.

Renewable energy in Portugal has more than doubled in just 10 years, increasing from less than 5 GW in 2001 to reach just less than 11 GW last year. In 2001 renewable energy accounted for just 3% of electricity production, but by last year this had risen to 25%.

Wind energy accounted for 93% of Portugal’s electricity usage at one point, although admittedly this was at 4:30 AM in the morning. During the last decade Portugal’s use of fossil fuels has declined from 60% to less than 40%, and imports have fallen for five successive years.

The impact of renewable energy has meant Portugal saved €400 million between 2005 and 2010. Portugal has the world’s largest solar farm, and has Europe’s largest wind farm. It also has an impressive hydroelectric dam infrastructure. Just recently a Finnish company built a machine which is anchored to the ocean floor just north of Lisbon, and which utilises wave energy.

These types of projects could provide many jobs within the green energy sector in Portugal. In the past the Portuguese government used to give subsidies for electric vehicles and domestic solar panels, but these have been cut during the recent austerity measures.

OECD Says Portuguese Economy May Get Worse before It Improves

According to the Organisation for Economic Corporation and Development, the Portuguese economy will contract much more than expected next year, and there is the risk that the country may spiral into more debt.

The OECD feels that Portugal will need to implement further budget cuts in order to meet the deficit targets required for its €78 billion bailout from the European Union and International Monitory Fund.

The OECD is predicting that the Portuguese economy will contract by 1.8% next year, double its forecast in July and more than the 1% contraction forecast by the Portuguese government. It has made this prediction as it is concerned that the effects of the current cuts could be larger than expected, and could initially create worsening economic conditions.

However the OECD does expect Portugal to return to growth late in 2013, as it is predicting that export growth will offset weak domestic demand.

Last year the Portuguese economy contracted by 1.7%, and is expected to contract by 3.1% this year. This means it will be Portugal’s worst recession since the country returned to democracy in 1974. Since Lisbon received the bailout funds last year it has raised taxes and implemented harsh spending cuts, but economists think the country could need more financial help.

This is because the tax hikes that will take effect next year could affect growth and private consumption which is being forecast to fall by as much as 3.5% in 2013, considerably more than the government for costs of 2.2%. Unemployment levels are already at record highs, and are expected to peak at 16.9% in 2013.

Portuguese Government Approves Tax Hikes

The Portuguese government recently approved substantial tax hikes in order to keep to its austerity program, but it faced opposition from all parties who voted against the deficit reduction measures. These measures mean most workers will lose the equivalent of around one month income in 2013.

The opposition feels current austerity measures won’t do enough to revive the economy and the concern is that Portugal could end up going the same way as Greece. However the European Central Bank and the International Monetary Fund have praised the government’s strategy and feel it will do much to help Portugal return to financial health.

For its part, the government feels it’s hands are tied and there is simply no choice but to implement these tax increases. The bailout deal which is worth a total of €78 billion requires Portugal to cut its deficit, and the country has currently received €61 billion in bailout funds.

Although the finance minister of Portugal has been quoted as saying the tax hikes are “enormous” he is hopeful they will help restore investor confidence in the country, and that Portugal will still be able to obtain international credit from September next year as planned.

The current spending cuts are worth €2.7 billion, and the aim is to reduce the budget deficit to 4.5% in 2013 compared to 5% in 2012. The government hopes the new taxes will increase revenue by 30% in 2013. However the Organization for Economic Corporation and Development is predicting the economy will contract by 1.8% next year, and the government forecasts showed the unemployment rate will increase from 15.7% to reach a record 16.4% in 2013.