Positive Financial Signs For Portugal

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Everyone knows that the world is not going through a tremendous time at the moment. From a financial perspective things are certainly difficult, and most countries in Europe are feeling the brunt of those problems and are currently concerned about what the future may hold for them.

Portugal is of course not immune from those problems, but there are some hopeful signs on the horizon about the long term viability of the Portuguese economy which should give observers cause to feel optimistic.

The first of these is a report that shows that the first eight months of 2012 saw capital payments figures and the balance of trade figures being in positive numbers and with the year (so far) actually seeing a cash surplus of €751 million.

At any time this would have been cause for celebration, but in the current climate it really is almost unprecedented amongst the current users of the European Currency, the Euro.

The Portuguese Government have been collecting these figures since 1996, and in all that time this is actually the first time that this particular item on the Portuguese balance sheet has been in the black, rather than in the red.

Subsequent months did see the figure fall back into the red, to the tune of $220 million in August 2012. But even so, taken as a whole, the results for the first 8 months of the year are much better than had been predicted and mark a dramatic change over the figure of a €7.3 billion deficit in 2011, or the figure of €17 billion which was recorded in 2009.

In layman's terms this means that the economic outlook for the Portuguese economy is really very healthy for the long term, even if there are clouds on the horizon with regard to how the finances of European countries that are currently in the Euro are handled in the short to mid-term.

Other figures that were released that should also put a smile on people's faces are the fact that exports of services and goods rose by 6.7% to a figure of some $43.2 billion, meaning that taken as a whole, Portugal had a trade surplus (non-financial) of €315 million.

These figures were applauded by leading trading bodies within Portugal, with the President of The Portuguese Agency for Foreign Investment and Trade (AICEP), Pedro Reis, commenting:

"We are dealing with a historical moment, which takes on added importance within the current context when we need to show to our international partners and markets that our business sector is able to respond positively to the challenges of structural reform and internationalization.”

The other good aspect of this that he highlighted, which may otherwise have been stuck in the detail of the announcement, was to focus on the fact that much of this was as a result of rising exports from Portugal (55.9%), rather than a drop in imports (44.9%).

The reason why this is a key distinction is because it is indicative of a dynamic economy that is fighting its way out of recession not only by saving on costs (which everybody must do in periods of downturn), but also by actively developing new business.

With competition getting increasingly tough as the years have gone along it becomes ever more important that business is being actively developed, because the Eurozone particularly is becoming ever more competitive with each passing year and countries need to stay competitive.

To look at the whole subset of figures relating to the Portuguese economy, it is also useful to know that there was a $5.845 billion surplus in the service sector in Portugal, while there was a negative trade balance of €5.53 billion to offset against it.

In many ways this should give hope to those people who are eagerly looking at the Portugal Property market, because as costs go down in the coming years (which they almost certainly will with all the frugality measures that are being put in place by the Portuguese Government), and efficiency and output continues to rise. Then the economy will grow stronger and the property sector is likely to see some benefits.


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Published in: Guide to Portugal / Money / News and Updates / Property / Travel