Capital
Lisbon

GEOGRAPHICAL LOCATION
Portugal is located in the west and southwest parts of the Iberian Peninsula in southwestern Europe, and is the western most country in continental Europe.

Climate
Maritime temperate; cool and rainy in north, warmer and drier in south.

Natural Resource
Natural resources such as copses cover about 34% of the country, namely pine trees (13,500 km²), cork oak (6,800 km²), holm oak (5,340 km²), and eucalyptus (2,430 km²). 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.

Economy
Portugal is a market economy, its per capita output stands at 76% of EU-15 average.

Portuguese GDP grew by 1% in real terms in 2004. It was expected to grow 1.8% by the (IMF) in 2005. Overall, the country's recovery is gradual, although the financial sector has remained strong.

Membership in the European Union (EU) contributed to stable economic growth, largely through increased trade ties and an inflow of funds to improve the country's infrastructure. In order to qualify for the Economic and Monetary Union (EMU), Portugal agreed to cut its fiscal deficit and undertake structural reforms. The EMU brought to Portugal exchange rate stability, falling inflation, and falling interest rates. Falling interest rates, in turn, lowered the cost of public debt and helped the country achieve its fiscal targets.

Portugal's economy is based on traditional industries such as textiles, clothing, footwear, cork and wood products, beverages (wine), porcelain and earthenware, and glass and glassware. In addition, the country has increased its role in Europe's automotive sector and has a world-class mold-making industry. Services, particularly tourism, are playing an increasingly important role.

Industries
The major industries are the textile, footwear, leather, furniture, ceramics (highlighting the international popularity of Vista Alegre), 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.

FOREIGN TRADE AND INVESTMENT
Foreign trade has contributed significantly to Portugal's economic growth.

Portugal's most important trading partners remain other EU Member States, with Spain, Germany, France, Italy and the United Kingdom its principal trading partners. The United States is Portugal's most important non-EU trading partner.

Trade with the former African colonies has fallen in relative importance and Brazil ranks well behind many of Portugal's European trading partners.

China only accounted for 4.4% of Portugal’s non-EU imports, but its market share has been growing strongly, and the value of Chinese imports grew by 23.5% year on year in 2004.

Portugal received significant foreign direct investment (FDI) in the past decade. EU Member States are the main sources of FDI, particularly Spain, Germany, the United Kingdom and France. The impact of FDI has been largely focused in the Lisbon and Tagus Valley region. Foreign investors who have been attracted by Portugal's low labour costs, however, may now look to the central and eastern European states that have recently joined the EU, as many of these new Member States have lower wage rates, higher skill levels and are located closer to northern European markets.

Transportation
The improvement of the road network has been a major government priority since the early 1990s. Portugal has more motorways, in terms of distance per inhabitant, than any other EU country.

The two principal metropolitan areas have subway systems: Lisbon Metro and Porto Metro, both with more than 35 km of commercial lines. Both systems are linked by sharing stations with High-speed Pendolino trains, known as Alfa Pendular, that link both cities.

Highways
The country has a 68,732 km network of highways. Almost 2,000 km is the total length of 44 freeways that connect most of the country. Total paved: 59,110 km (including 797 km of expressways)

Railways
Total: 3,072 km

Waterways
Seaports are important due to Portugal's large coastline, and its strategic position in Europe and in the Atlantic ocean. The main seaports are Lisbon in the centre, Leixões (Porto) in the North, Setúbal and Sines in the south, Funchal and Ponta Delgada in the Atlantic. Total: 820 km navigable.

Air
The most important airports are those of Lisbon, Faro and Porto, these last two had extensive development recently. There are also important airports in the islands, such as the intercontinental airport of Madeira (Funchal, Madeira Island), Porto Santo (Porto Santo Island), and Ponta Delgada (Azores).

Agriculture
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), vineyards (3,750 km²), wheat (3,000 km²) and maize (2,680 km²) 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.

Services
Portugal has become a diversified and increasingly service-based economy since joining the European Community in 1986. Over the past decade, successive governments have privatized many state-controlled firms and liberalized key areas of the economy, including the financial and telecommunications sectors. The country qualified for the Economic and Monetary Union (EMU) in 1998 and began circulating the euro on 1 January 2002 along with 11 other EU member economies. A poor educational system, in particular, has been an obstacle to greater productivity and growth. Portugal has been increasingly overshadowed by lower-cost producers in Central Europe and Asia as a target for foreign direct investment. The coalition government faces tough choices in its attempts to boost Portugal's economic competitiveness and to keep the budget deficit within the 3% EU ceiling.

Tourism
The tourism sector is one of the most important in the portuguese economy, typically accounting for between 7-8% of GDP and employing roughly 10% of the labour force.

The tourist revenue makes receipts totalling an estimated euros 6.3 billion in 2004.

Annual Indicators

Foreign Trade (2006)

Mainland China-Portugal Bilateral Trade (USD 10,000)

Macao SAR-Portugal Bilateral Trade (US$ million)

Macao SAR-Portugal Bilateral Trade (US$ 1,000)

Given the language, culture and the close relationships, Macao has been dealing with Portugal and other Portuguese-speaking countries through various channels for a long time. IPIM has co-operation protocols with the ICEP and AIP of Portugal.

Source:

• China Statistical Yearbook 2006
• Macau Economic Services
• Macau Statistics and Census Department
• The Economist Intelligence Unit – Country Profile, Country Report
• ICEP - Portugal - Instituto das Empresas para os Mercados Externos
• INE – Instituto Nacional de Estatística
• Ministry of Foreign Affairs of the People’s Republic of China
• The World Bank
• The World Economic Factbook 2005/2006
• The World Factbook

Related Links:

• BBC news – country profile Portugal http://newsvote.bbc.co.uk
• Portugal www.portugal-live.net
• Infoplease Portugal www.infoplease.com
• Permanent Mission of Portugal to the United Nations www.un.int
• The World Bank www.worldbank.org
• The World Factbook www.cia.gov