Portugal flag

Portugal country brief

Located in south-western Europe, Portugal has a 1,793 km border to the west with the North Atlantic Ocean and a 1,214 km border with Spain to the north and east. Portugal is home to over 10.7 million people. The capital of Portugal is Lisbon.

Portugal is a parliamentary democratic republic with a unicameral parliamentary system. It became a republic after a revolution deposed the monarchy in 1910. Portugal is a founding member of NATO and entered the European Community (EC), now the European Union (EU), in 1986. In January 2011, Portugal assumed a non-permanent seat on the UN Security Council for the 2011-12 term.

Bilateral relations

Portugal has an Embassy in Canberra and a Consulate General in Sydney. Australia has an Embassy in Lisbon.

A shared interest in the future of Timor-Leste is a key element in bilateral relationship between Australia and Portugal. The relationship was earlier overshadowed by disagreements on Timor-Leste policy, but improved after 1999 when the two countries began working together to assist Timor-Leste's transition to independence. Close cooperation remains important following Timor-Leste's independence: both countries have a strong shared interest in Timor-Leste’s long-term stability and prosperity.

As the two largest donor countries, Australia and Portugal are like-minded in placing importance on continuing to work closely and cooperatively to ensure long-term stability in Timor-Leste and a coordinated approach to development assistance.

Community, cultural and educational links

Portuguese migrants from the island of Madeira settled in Fremantle in Western Australia in the 1950s and established a fishing community. Western Australia now boasts a Portuguese community of over 6,000 people. Portuguese migration to Australia, however, has mostly occurred since the late 1960s. According to the 2011 Census, 15,328 Portuguese-born live in Australia; 46,519 claim Portuguese ancestry. The majority of Portuguese migrants have settled in Sydney, Wollongong, Newcastle, Melbourne, Perth and Fremantle.

The presence of a Portuguese community in Australia has produced a steady flow of family visits and cultural exchanges in recent decades. Student numbers remain relatively low at approximately 400 per year.

BairroPortuguês: Petersham Food & Wine Fair – Sydney

Every year in March since 2003, Petersham's Audley Street has transformed into Bairro Português. The streets come alive with a party atmosphere, featuring contemporary and traditional Portuguese and Brazilian dancing and music, wine tasting, stalls serving delicious Portuguese and Brazilian cuisine, and activities for children.

Trade and investment

Two-way merchandise trade between Australia and Portugal was A$176 million in 2011-12. The balance of trade remains in Portugal’s favour, with exports to Australia amounting to A$164 million – principally attributed to exports of passenger motor vehicles (A$56 million), cork manufactures (A$16 million), and furniture, mattresses and cushions (A$10 million). Australia rates as Portugal’s 47th principal export destination and 82nd import source. Services trade with Portugal is negligible.

Australia’s investment in Portugal for 2011 was A$223 million. Portuguese companies have invested in plants in Australia to manufacture wine closures from Portuguese cork, as well plants for timber, veterinary, wine, pharmaceutical and biotechnology industries. Total investment in Australia from Portugal was A$22 million in 2011.

Bilateral agreements

Australia and Portugal signed a bilateral social security agreement in Lisbon on 3 September 2001, which entered into force in 2002. The agreement provides improved social security protection to people who have lived and/or worked in both Australia and Portugal. The agreement also exempts Australian employers from the need to provide Portuguese social security support for Australian employees sent temporarily to work in Portugal, provided the employee remains covered in Australia by compulsory superannuation arrangements.

As an EU member, Portugal has access to a simple online visitor visa service to travel to Australia either for tourism or business purposes. Portugal is a signatory to the 1990 Convention applying the Schengen Agreement, a European inter-governmental arrangement on the elimination of border controls between signatory countries. Australian citizens have visa-free access for visits for tourism, business (other than paid employment), or official purposes and can stay in the Schengen area (including Portugal) for up to 90 days in total.  As an EU member Portugal has access to a simple online visitor visa service to travel to Australia for tourism or business purposes.

High-level visits (positions held at time of visit)

Political overview

The President of the Republic is directly elected for a maximum of two consecutive terms of five years. The President has no executive power, but has a role in foreign policy (on former colonies such as Timor-Leste) and plays an important role as a political arbiter, while maintaining political neutrality. The President is also Commander-in-Chief of Portugal's armed forces.  

On 22 January 2006 former Prime Minister, Anibal Cavaco Silva, was elected as President in the first round of voting, obtaining 50.6 per cent of the vote. He was inaugurated as President on 9 March 2006. On 23 January 2011 President Silva was elected for a second term.

In 2009 the Socialist Party was returned to power under Prime Minister Socrates. However, having failed to secure passage of his austerity budget in March 2011, Socrates resigned. At the subsequent elections in June 2011, the centre-right Social Democrats, led by Pedro Passos Coelho, won enough seats to form a coalition government with the rightist Popular Party.

Foreign policy

The European Union (EU) is at the heart of Portuguese foreign and economic policies. Portugal was one of the Contracting States that established the EU in 1994.  It has held the rotating six-monthly Presidency of the European Council on three occasions: in 1992, 2000, and again in the second half of 2007. Portugal participates in the EU foreign policy agenda, particularly in relation to its former colonies in Africa, Latin America and Asia (Timor-Leste and Macau). The highlight of Portugal's most recent Presidency was the signature of the EU Reform Treaty (the "Lisbon Treaty") by all 27 member countries in December 2007 and the holding of an EU-Africa Summit in Lisbon in 2007, the first such Summit in ten years. Former Portuguese Prime Minister Jose Manuel Durão Barroso has held the position of President of the European Commission since November 2004.

Portugal is a founding member of NATO and places a high priority on a strong transatlantic relationship. The United States has an air-force base at Terceira in the Azores islands and NATO has a command centre near Lisbon.

Portugal and Timor-Leste

The former colony of Timor-Leste remains an important foreign policy focus for Portugal. Portugal did not recognise the 1975 annexation of what was then Portuguese Timor by Indonesia and pursued the cause of East Timorese independence in international forums for many years. Since the 1999 referendum that resulted in Timorese independence, Portugal has engaged closely in supporting Timor-Leste’s development and security. The Portuguese Armed Forces have participated in UN Security Council-endorsed peacekeeping activities in Timor-Leste.

Prior to the cessation of its mandate on 31 December 2012, Portugal was the second largest contributor to the policing operations of the UN Integrated Mission in Timor-Leste (UNMIT).  The United Nations Police (UNPOL) component of UNMIT was commanded by Police Commissioner Luis Carrilho, a Portuguese national. Portugal will continue to be a significant bilateral aid donor to Timor-Leste over the longer term and has been active in pursuing continued EU assistance for the country.  

In addition to Timor-Leste, Portugal contributes 164 troops (April 2013) to the International Security Assistance Force (ISAF) and two troops to the Operational Mentor and Liaison Team (OMLT) in Afghanistan.

Economic overview

Portugal has become a diversified and increasingly service-based economy since joining the EU (services now account for approximately 75% of GDP). The country qualified for the European Monetary Union (EMU) in 1998 and began circulating the Euro in 2002, along with 11 other EU member economies.

Economic growth has been weak since 2008. Portugal has been increasingly overshadowed by lower-cost producers in Central Europe and Asia as a target for foreign direct investment. A significant trade deficit (US$20 billion in 2011-12) and long-overdue infrastructure upgrades have contributed to slow growth. Although it has received structural funding from the EU , modernisation of Portugal’s industry has been slow. Public finances have also become a significant concern, like in other European countries.

In May 2011, former Prime Minister Socrates secured an EU-IMF bailout package valued at around €80 billion to address international concerns about Portugal’s national debt. In return for the loan, which covers the period 2011-14, Portugal is expected to reduce its deficit by a substantial amount. By 2011– through a combination of spending cuts, tax increases and other reforms – the deficit had been cut to 4.4% of GDP (from 9.9 the previous year), although this is expected to rise again in 2012-13.

In the meantime the Portuguese economy has been in continuous recession since 2010. The economy shrank by around 3.2% in 2012 and is expected to contract by a similar amount in 2013, returning to weak growth levels in 2015 at the earliest. Unemployment is now around 17.7%, compared to 8% in 2007.

Foreign trade and investment

Portugal’s principle export destinations and import sources are Spain, Germany and France.  The EU makes up 74% of Portugal’s export market and 73% of its imports. The United States, Brazil and Angola are Portugal's most important non-EU trading partners. The main Portuguese exports are machinery and equipment, as well as vehicles, vessels and aircraft.

EU Member States are the main sources of foreign direct investment (FDI), particularly Luxembourg, Spain, the United Kingdom, France, the Netherlands and Germany.  Investment promotion remains a high priority for the government, as well as exporting to overseas markets. Nowadays economic diplomacy is one of the major goals of Portuguese foreign policy. In 2011, the Portuguese Agency for Investment and External Trade (Agência Para o Investimento e Commercio Externo Portuguesa)  was placed under the umbrella of the Portuguese Ministry of Foreign Affairs. Portugal wants to diversify its traditional business partners, focusing more on the Middle East, Asia and Latin America. It is also seeking to attract investment involving technology transfer in sectors like information and communications technologies, biotechnology and renewable sources of energy.

Updated June 2013