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Portugal country brief

Portugal country brief

Located in south-western Europe, Portugal is bordered by the North Atlantic Ocean and Spain. In addition to the mainland, Portugal's territory also includes the Autonomous Regions of the Azores and Madeira, two archipelagos located in the Atlantic Ocean. Portugal is home to 10.3 million people (2017). The capital of Portugal is Lisbon.

Bilateral relations

Australia and Portugal have a good bilateral relationship. Portugal has an Embassy in Canberra and a Consulate-General in Sydney as well as Honorary Consulates in the Northern Territory, Queensland, South Australia, Victoria and Western Australia. Australia has an Embassy in Lisbon.

According to the 2016 census, 61,886 Australians claim Portuguese ancestry while 15,804 are Portuguese-born. These community links have produced a steady flow of family visits and cultural exchanges in recent decades.

Portugal is Australia's 60th largest inbound market by short-term visitor arrivals. In the year ended June 2017, there were 6,600 short-term visitor arrivals from Portugal (up 11.6 per cent on the previous year).

Over the last five years, the average annual growth rate in arrivals from Portugal was 10 per cent. Portugal is Australia's 53rd most popular short-term destination. In the year ended June 2017, there were 15,400 short-term resident departures from Australia to Portugal (up 16.7 per cent on the previous year). In the last five years, the average annual growth rate in departures to Portugal was 12.9 per cent.

Portuguese student enrolments in Australian education institutions totaled 1,127 in 2016 and included higher education (336), vocational education and training (375), schools (33), English Language Courses for Overseas Students (ELICOS) (308) and non-award courses (75).

Trade and investment

The global economic crisis and the associated downturn in the Portuguese economy had a dramatic impact on Australian merchandise exports to Portugal, which more than halved to around $16.6 million in 2016. On the other hand, Portuguese exports to Australia have grown over the last three years, with merchandise exports totaling $208.7 million in 2016.

Commercial interest between Australia and Portugal is growing, underlined by the opening of the Sydney office of the Portuguese trade and investment promotion agency AICEP Portugal Global in 2017. Australian investment in Portugal totaled $391 million in 2016 (including investments in mining, oil & gas, tourism, aviation services, renewables, information technology) while Portuguese investment in Australia amounted to $90 million.

The Australian Trade and Investment Commission (Austrade) visited Lisbon and Porto in May 2017 to deliver a seminar to promote Portuguese business and investment in Australia. The seminar also helped to promote a business delegation to Australia in September 2017, led by the Portuguese Business Association (Associação Empresarial de Portugal - AEP).

Bilateral agreements

Australia and Portugal signed a work and holiday visa arrangement in September 2014, which came into effect in November 2014. The arrangement offers young people from Australia and Portugal the opportunity to experience short-term work and study arrangements in each other's country. In both 2015-16 and 2016-17, Portuguese citizens have utilised the 200 placed allocated each year under the work and holiday visa arrangement.

Australia and Portugal signed a bilateral social security agreement in 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 Portugal is an EU Member State, Portuguese citizens have access to a simple online visitor visa service to travel to Australia either for tourism or business purposes. 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.

High-level visits

(Note: Positions indicated in the list below were held at the time of the visit)

To Portugal:

  • 2017: Special Envoy for Human Rights Philip Ruddock visited Lisbon
  • 2015: Minister for the Environment Greg Hunt visited Lisbon
  • 2013: President of the Senate John Hogg visited Lisbon
  • 2010: Prime Minister Julia Gillard and Defence Minister Stephen Smith visited Lisbon for a NATO Summit
  • 2009: Minister for Environment Protection, Heritage and the Arts Peter Garrett visited Madeira
  • 2008: Minister for Defence Joel Fitzgibbon visited Lisbon.

To Australia

  • 2017: Deputy Minister for Portuguese Communities Abroad José Louís Carneiro visited Australia
  • 2017: President of the Portuguese trade promotion agency AICEP Miguel Frasquilho visited Sydney and Melbourne
  • 2012: President Aníbal Cavaco Silva visited Australia
  • 2009: Foreign Minister Luis Amado visited Australia for Australia-Portugal political consultations
  • 2009: Member of the Assembly of the Republic of Portugal Sonia Fertuzinhos visited Australia, as part of the Special Visits Program.

Political overview

Portugal is a democratic republic with a unicameral parliamentary system, based on the 1976 Constitution. It became a republic after a revolution deposed the monarchy on 5 October 1910. Portugal's modern democratic state was established on 25 April 1974, with the overthrow of the ruling dictatorship.

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 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 24 January 2016 Marcelo Rebelo de Sousa, a former leader of the Social Democratic Party (PSD), Professor of Law and political commentator, was elected as President in the first round of voting, obtaining 52 per cent of the vote. He was inaugurated as President on 9 March 2016. The next presidential election will be held in January 2021.

The most recent parliamentary election took place in October 2015. The then government coalition consisting of the Social Democrats (PSD - Right Liberal) and the Centro Democrático Social - Partido Popular (CDS-PP Christian Democrats) initially won the election with 38.6 per cent of the vote, but lost its absolute majority. On November 10, 2015, the minority government was overthrown by a vote of no-confidence presented by the main opposition Socialist Party (PS). The PS leader, António Costa, was subsequently appointed to form a new minority government by then President, Aníbal Cavaco Silva. Prime Minister Costa took office on November 26, 2015. Support by the Left Bloc (BE), the Communist Party (PCP) and the Greens (PEV) provides the government with a majority in the parliament. The next general election is due to be held no later than October 2019.

Foreign policy

The European Union (EU) is at the heart of Portuguese foreign and economic policies. Portugal 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 (then) 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.

Portugal is a founding member of NATO and places a high priority on a strong transatlantic relationship. Portugal was a Non-Permanent Member of the United Nations Security Council 2011-2012 and has presented its candidature for the 2027-2028 term. Former Prime Minister Antonio Guterres was appointed UN Secretary General in October 2016.

Portugal has contributed troops to the UN Integrated Mission in Timor-Leste (UNMIT), the International Security Assistance Force (ISAF) and to the Operational Mentor and Liaison Team (OMLT) in Afghanistan, as well as to Kosovo (UNMIK), Iraq (UNAMI), Lebanon (UNIFIL), Somalia (UNOSOM), Croatia and Bosnia (IFOR/SFOR), Mozambique (ONUMOZ), Angola (UNAVEM/MONUA) and Chad and the Central African Republic (MINURCAT). Portugal has also contributed police to operations in Yugoslavia (UNPROFOR), Congo (MONUC), Guinea Bissau (UNIOGBIS) and Timor-Leste (UNTAET/UNMIT/UNMISET).

Portugal also maintains cooperation and friendship links with other Portuguese-speaking countries through the Community of Portuguese Language Countries (CPLP). The CPLP's Executive-Secretariat is based in Lisbon.

The former colony of Timor-Leste remains an important foreign policy focus for Portugal. Portugal did not recognize 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. Australia and Portugal have a shared commitment to the long-term stability and prosperity of Timor-Leste. In 2016, Australia was the largest aid donor to Timor-Leste and Portugal was the eighth-largest.

Economic overview

Portugal's economy has diversified and become increasingly service-based since the country joined the EU (1986). Portugal was one of eleven EU Member States to launch the euro currency in 1999. The currency began circulating in 2002.

The global financial and economic crisis that started in 2008 and the ensuing 2009 European sovereign debt crisis had a substantial negative impact on the Portuguese economy. In response, Portugal adopted an economic adjustment program in 2011, developed in partnership with the European Union and the International Monetary Fund. The program put Portugal on a path to stabilize the economy, correct domestic economic imbalances and restore growth. Portugal managed to make a clean exit when the three-year program concluded in May 2014, and the efforts made by the then PSD-CDS coalition government were applauded internationally. Since then, the economy has posted consecutive quarters of growth, beginning under the previous government, and continuing during the current one. In 2016, GDP grew by 1.4 per cent and the budget deficit hit a 40-year record low of 2.1 percent of GDP, paving the way for Portugal's exit from the EU's Excessive Deficit Procedure (June 2017). Meanwhile, unemployment decreased to 11.2 per cent in 2016 and continued to drop to 9.1 per cent in mid-2017.

In order to maintain the positive economic momentum, challenges for the government in the period ahead include reducing the high level of public debt, currently at 130 per cent of GDP, and addressing non-performing loans in the banking system, which are hampering investment and holding back growth and productivity. Despite Portugal's exit from the Excessive Deficit Procedure in June 2017, the European Commission is likely to keep pressure on the Portuguese government to accelerate structural reforms.

Portugal conducts the overwhelming majority of its external trade with the rest of the European Union, which represents 75 per cent of Portugal's export market and 78 per cent of its imports. Significant non-EU trading partners are the United States, China, Brazil and Angola. Portugal's main exports are machinery and tools, followed by vehicles and other transport material, textile articles, plastics and rubber, base metals and agricultural products. The tourism sector is playing an increasingly important role in economic recovery, as are the services and technology sectors. Following the economic crisis, Portugal has actively sought to diversify its export markets and sources of investment.

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