Country Trade Risk Index (ERI): 97.90
Country risk reference rating: 5 (5/9)
Country Risk Outlook: Stable
Economic and trade risks
In 2012, Portugal’s nominal GDP was US$165.4 billion, with a real growth rate of -3.2%. The service industry accounted for 76.3% of GDP, industry accounted for 21.3%, and agriculture accounted for 2.4%. Portugal’s political situation is generally stable, but the economic recession continues to deepen, the financial situation continues to deteriorate, and the risk of a debt crisis remains high. Economic structural reforms are still difficult to implement, and the future economic prospects are hardly optimistic. Portugal has a relatively sound legal system, relatively complete infrastructure, a high degree of marketization, a superior geographical location, and a good business environment. However, the Portuguese labor market lacks flexibility, the labor unions are strong, strikes and protests are frequent, and foreign-invested operations need to pay attention.
Business environment
Although there are many economic irregularities, the overall business environment is good. Portugal’s low productivity level has become a shackle for its economic development. In addition to the quality of the labor force itself, tax evasion and other irregular economic behaviors are also the main factors that hinder the improvement of its productivity level. Therefore, Portugal’s labor costs are also very low. Portugal has a sound infrastructure. Benefiting from the aid funds after joining the European Community, the country has continued to increase its investment in infrastructure, and its transportation network and port facility operating capabilities have been greatly improved, which can meet the needs of foreign investors for the hard environment. The government announced a new plan to encourage investment, including a series of tax incentives and measures to promote investment, including additional investment tax exemptions, strengthening tax incentives to encourage investment, expanding the scope of tax investment incentives, and setting up foreign investment tax offices.
Bilateral economy and trade
The economic and trade relations between China and Portugal are developing smoothly. The current economic recession in Portugal has not only had an adverse impact on the development of bilateral trade, but it has also created many opportunities. The main commodities exported from China to Portugal include electrical and motor equipment, toys, furniture, etc., while the main commodities imported from China include machinery and equipment. Statistics from China Customs show that in 2012, the bilateral trade volume between China and Portugal was US$4.02 billion. Due to the sovereign debt crisis and economic crisis, the Portuguese government has implemented privatization of state-owned enterprises on the one hand, and actively attracted foreign investment on the other. It attaches great importance to developing relations with China, providing opportunities for both sides to further strengthen economic and trade cooperation. In the future, the two countries have huge potential for cooperation in renewable energy, communications, electronics, information technology, biotechnology, pharmaceutical industry, software development and other fields.
Legal risks
The Portuguese legal system is relatively complete. Laws and regulations related to business mainly include land law, commercial law, investment law, company law, competition law, bankruptcy law, labor law, procurement law, etc. There are no clear provisions prohibiting foreign investment. , the legal system is relatively sound, the infrastructure is relatively complete, the degree of marketization is high, the geographical location is superior, the wage cost is lower than other EU member states, and the trade and investment risks are relatively low. In May 2013, the Portuguese Foreign Investment and Trade Bureau issued a plan to stimulate economic growth. One of the core contents is to increase the introduction of foreign investment.
Portugal does not explicitly prohibit foreign investment in areas, but if the investment industry involves arms manufacturing or public utilities, it should be evaluated in advance by the Portuguese Commission before implementation. Portugal stipulates that public utilities such as water supply, postal service, railways, and seaports are state-controlled franchise industries. Enterprises must pass competitive bidding and sign restrictive agreements with the government before they can operate. Foreign companies must cooperate with local Portuguese enterprises or register companies locally. Can participate in operations. (Issuing agency: China Export and Credit Insurance Corporation)
