There is no doubt that the Portuguese economy has had a torrid time of it over the last decade or so – since the inception of Portugal as a democracy in 1974, there has been a general failure by government to control public spending, which lead to a ballooning in the size of the public sector and an unmanageable deficit. Furthermore Portuguese businesses have been burdened with a Kafkaesque bureaucracy, labour laws that typically favour the employee over the employer and a painfully slow legal system, all of which made Portugal a difficult place to do business in.
Around the turn of the century, there were some significant reforms made to make the economy more responsive and business friendly, but it proved to be too little, too late. The chickens came home to roost in 2011, when Portugal had to request a bailout for €78 billion from the IMF & EU, as the deficit of 9.4% proved to be unmanageable and the the treasury was on the brink of defaulting. This hapless failure to run the economy properly by successive governments of all colours was in a sense a turning point though; the bailout came with stringent conditions, which entailed dramatic reductions in the size of the public sector, pro-business reforms of labour legislation in particular, a dramatic simplification and modernization of the bureaucratic system for business and a general realization that the private sector was the key to carrying the economy out of the hole it was in.
Here is a review of recent economic data Portugal made by AICEP (a Portuguese trade promotion association) and among the gloomy economy growth figures, there is to be found a story of a leaner and fitter private sector emerging, which exports for example growing dramatically and more foreign firms investing in Portugal (particularly in manufacturing and hi-tech in the north and the Porto area in particular). Here at PortugalWorks, we believe that the north of Portugal is turning into a success story, despite its chequered past and that economic reforms of recent years or so are now helping to provide the building blocks for a sustained recovery.
If your business is interested in investing in Porto or northern Portugal, please contact us for assistance firstly for us to show you what Porto and the North has to offer and then second to help make your business happen.