It’s anticipated that Portugal will finish this year with exports in excess of 40% of GDP. This would be the first time this has been achieved since before the end of World War II in 1943. In spite of these positive predictions, the Portuguese government is hoping to increase exports until they reach 70% or even 80% of GDP.
The Portuguese economy minister Alvaro Santos Periera, feels that the key areas of investment have been ignored in the past, and that more efforts should be concentrated on sectors such as mining and agriculture. The agricultural minister is due to open the first-ever Portugal-Mozambique food forum this month. The minister is hoping to increase Portuguese exports to Mozambique, although exports to this country increased by 33% last year.
At the same time the Portuguese economy minister is aiming to be in the top 10 business friendly countries. It’s hoped Portugal will become less bureaucratic, and it’s aiming to emulate the British coalition government’s policy of ensuring every time a new regulation is introduced, another older one is eliminated.
Portugal’s corporate tax system is already being reviewed to see if it can be made more business friendly. Part of this plan will definitely be to make the country more tourism friendly, but it’s also hoped the mining industry will see significant investment. It’s estimated the value of deposits of iron ore, copper, wolfram and gold are worth between €170 billion and €250 billion. In addition prospecting for gas and oil is ongoing.
For the first time ever Portugal has recorded a positive trade balance during the first eight months of this year, with the overall balance of capital payments and trade turning positive. The central bank in Portugal reported an overall surplus of €751 million and the balance of payments turned positive to the amount of €4 million. This is the first time this figure has been in the black since the Bank of Portugal began collecting data in 1996.
Although the figures slipped back into the red in August with a deficit of €220 million this is minute compared to last year’s deficit of €7.3 billion, and the deficit for 2009 which was €17 billion. According to the bank, exports of services and goods have increased by 6.7% to reach €43.2 billion, giving a non-financial trade surplus of €315 million.
These are important figures as they have shown international partners and markets that the business sector within Portugal has been able to respond to the structural reforms in a positive way. Especially important is the fact that the improvement is due to an increase in exports rather than a drop in imports.
Exports increased by 55.9%, while the drop in imports was 44.9%. During the first eight months of this year Portugal had a negative trade balance worth €5.53 billion which has been offset by a €5.845 billion surplus in the service sector.
One of the products produced in Portugal for export is tomatoes, and the country’s second only to California in production. This year production was in excess of 1.2 million tonnes, and 95% were for export. However the situation next year might be quite different, as reforms in agricultural policies could lead to a 40% decline in the area cultivated due to a reduction in EU funding. If the reform is approved then many producers may feel it is advisable to grow tomatoes in the future. The business is estimated to be worth around €250 million annually.