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Portugal's good side

There have been, recently, many worries in the financial markets, about Portugal's financial situation.

This article intends at showing that not everything is as gloomy as it may seem.

As the country is a major source of market concern, an in-depth analysis of its macroeconomic indicators could shed some light on to whether the country remains a good target for investment, or not.

As such, in this article, a set of recent macroeconomic data, and some other factors,  will be provided, which intend to show that Portugal is actually faring favourably economically, given the current crisis.

The different items will be itemised to make it more clear for the reader:

a) Yearly growth in 2010:

(data taken from Eurostat)

Greece -6.6%
Romania -0.5%
Spain 0.6%
Italy 1.3%
Portugal 1.4%
France 1.6%
UK 1.7% 

From this perspective, it is worth noticing that Portugal outpaced all the other club med countries  in growth in 2010.

b) in terms of Debt-to-GDP ratio

(data taken from the International Monetary Fund)

1 Zimbabwe 241.60 2010 est. Africa
2 Japan 196.40 2010 est. Asia
3 Saint Kitts and Nevis 185.00 2010 est. North America
4 Lebanon 150.70 2010 est. Asia
5 Greece 144.00 2010 est. Europe
6 Iceland 123.80 2010 est. Europe
7 Jamaica 123.20 2010 est. North America
8 Italy 118.10 2010 est. Europe
9 Belgium 102.50 2010 est. Europe
10 Singapore 102.40 2010 est. Asia
11 Ireland 98.50 2010 est. Europe
12 Sudan 94.20 2010 est. Africa
13 Sri Lanka 86.70 2010 est. Asia
14 France 83.50 2010 est. Europe
15 Portugal 83.20 2010 est. Europe
16 Canada 83.10[2] 2010 North America
17 Egypt 80.50 2010 est. Africa
18 Dominica 78.00 2009 est. North America
19 Nicaragua 78.00 2010 est. North America
20 Israel 77.30 2010 est. Asia
22 Germany 74.80 2010 est. Europe

Portugal can be seen as having a debt-to-GDP ratio at par with other European peers

c) public deficit (in percentage)

(data taken from the guardian:

UK 13.3
Ireland 12.2
US 10.7
Iceland 10.1
Greece 9.8
Spain 8.5
Japan 8.2
Portugal 7.6

Portugal's deficit is lower than its club med peers, only higher than the public deficit of Italy, which is at 4.6%

d) Education


In a recent PISA study which evaluates students from OECD countries portugal ranked just below Hungary and the UK, and above Greece, Spain, Italy and Slovenia

This is important because it shows that the government's efforts in improving education have been successful

e) GDP per capita (In Purchasing Power Parity)

(data taken from Eurostat:,_consumption_per_capita_and_comparative_price_levels

GDP per capita in Portugal is 80% of EU average, even growing by 1% from 2008 to 2009, because Portugal recessed less than its peers. It's at the same level as the Czech Republic and right in the middle of the ranking list

f) finally in terms of ease of doing business

(data taken from the world bank: ;

in terms of ease to do business portugal ranked 32nd, at par with the Netherlands and Austria and way above Spain, Greece, Italy.

This is indicative that despite the crisis, Portugal has some fundamentals that may reveal economic strength in the medium and long term.

Portugal's efforts in improving education, have led to a much more educated society, with R&D development increasing to levels closer to those of the European core.

However, it is true that many investors have lost confidence in Portugal. It is nevertheless clear that this set of data  reveals a more balanced country in economic terms, which can help it overcome the current crisis.

Moreover, before the onset of the sovereign debt crisis last year, when  Portugal was not in the media's immediate attention, a set of pension reforms took place, that were somewhat overlooked during the crisis, and that should be taken into account when analysing the country's current situation. Not only the age of retirement was increased in 2010, as pension and other types of reform took place.

It's important to stress these important key factors in Portugal's economy, for investors. The country shows some positive signs, and these signs should be taken into account, as a possible sign that Portugal remains a good investment in the medium and long term.

It should also be noted that Portugal's cultural and historical relations with emerging markets, including Brazil and Angola are also key elements that should not be dismissed. In part, the increase in Portuguese exports by 15% observed in 2010 (data from Eurostat), can be explained by the fact that most Portuguese major companies have quite a lot of investments made in these markets.

Moreover, it should also be noticed that most major Portuguese private companies beat their profit benchmark in 2010.

In brief, it is perhaps clear that Portugal remains a good haven for investors seeking in investing in a country that shows some potential for growth, both internally, as internationally. Portugal is the European gateway for countries like Brazil and Angola, which are growing at a very fast pace. A good investor should take all this into account.


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.