Economic history of Portugal

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The economic history of Portugal covers the development of the economy throughout the course of Portuguese history. It has its roots prior to nationality, when Roman occupation developed a thriving economy in Hispania, in the provinces of Lusitania and Gallaecia, as producers and exporters to the Roman Empire. This continued under the Visigoths and then Al-Andalus Moorish rule, until the Kingdom of Portugal was established in 1139.

With the end of Portuguese reconquista and integration in the European Middle Age economy, the Portuguese were at the forefront of maritime exploration of the Age of Discovery, expanding to become the first global empire. Portugal then became the world's main economic power during the Renaissance, introducing most of Africa and the East to European society, and establishing a multi-continental trading system extending from Japan to Brazil.^[1]

In 1822, Portugal lost its main overseas territory, Brazil. The transition from absolutism to a parliamentary monarchy involved a devastating Civil War from 1828 to 1834. The governments of the constitutional monarchy were not able to truly industrialise and modernise the country; by the dawn of the twentieth century, Portugal had a GDP per capita of 40% of the Western European average and an illiteracy rate of 74%.^[2][3] Portuguese territorial claims in Africa were challenged during the Scramble for Africa. Political chaos and economic problems endured from the last years of the monarchy to the first Republic of 1910–1926, which led to the installing of a national dictatorship in 1926. While Finance Minister António de Oliveira Salazar managed to discipline the Portuguese public finances, it evolved into a single-party corporative regime in the early 1930s—the Estado Novo—whose first three decades were also marked by a relative stagnation and underdevelopment; as such, by 1960 the Portuguese GDP per capita was only 38% of the EC-12 average.^[4]

Starting in the early 1960s, Portugal entered in a period of robust economic growth and structural modernisation, owing to a liberalisation of the economy.^[5] As an expression of such economic opening, in 1960 the country was one of the EFTA founding member states. Yearly growth rates sometimes with two digits, allowed the Portuguese GDP per capita to reach 56% of the EC-12 average by 1973.^[4] This growth period eventually ended in the mid-1970s, for that contributing the 1973 oil crisis and the political turmoil following the 25 April 1974 coup which led to the transition to democracy. From 1974 to the late 1970s, over one million Portuguese citizens arrived from the former African overseas territories, most as destitute refugees—the retornados.^[6][7] After nearly a decade of economic troubles, during which Portugal received two IMF-monitored bailouts, in 1986 the country entered the European Economic Community (and left the EFTA). The European Union's structural and cohesion funds and the growth of many of Portugal's main exporting industries were leading forces in a new period of robust economic growth and socio-economic development that would flourish (though with a short crisis around 1992–94) to the early 2000s. In 1991, GDP per capita surpassed the 1973 level^[4] and by 2000 it had achieved 70% of the EU-12 average, which nonetheless constituted an approach to the Western European standards of living without precedents in the centuries before.^[8] Similarly, for several years Portuguese subsidiaries of large multinational companies ranked among the most productive in the world.^[9][10][11] However, the economy has been stagnant since the early 2000s and was heavily hit by the effects of the Great Recession, which eventually led to an IMF/EU-monitored bailout from 2011 to 2014. In 2022, Portugal was on the verge of becoming by 2030 the 3rd poorest member state of the European Union (out of 27).^[12]

The country adopted the euro in 1999. Despite being both a developed country and a high income country, Portugal's GDP per capita was of about 80% of the EU-27 average.^[13] The Global Competitiveness Report of 2008–2009 ranked Portugal 43rd out of 134 countries and territories.^[14] Research by the Economist Intelligence Unit's (EIU) Quality of Life survey in 2005^[15] ranked Portugal 19th in the world. Portugal is home to a number of major companies with international reputation such as Grupo Portucel Soporcel, a major world player in the international paper market, Sonae Indústria, the largest producer of wood-based panels in the world, Corticeira Amorim, the world leader in cork production, and Conservas Ramirez, the oldest canned fish producer in continuous operation.