Recipes for success
A demand-driven recovery policy, supported by a social policy: this is how it could be summed up.
When he took office in 2015, Antonio Costa pledged to turn the page on the austerity that had taken hold of the country. In order to fulfil his promise, he gradually raised the minimum wage, reviewed the problem of civil servants' pay and the pension system, which had been severely and directly affected by the crisis. Households have been able to consume again and more thanks to a programme to combat precariousness and a new economic dynamism.
A revival of export-oriented industries such as the automotive, footwear and textile sectors, which had almost disappeared from the economic landscape, also supported the recovery, while at the same time Portugal has welcomed a growing number of foreign companies that continue to invest.
For example, Chinese investment groups have freed up several billion euros and have become shareholders in Portugal's largest insurance company, the REN electricity network and Millennium Banco Comercial Português, the country's main private bank.
What benefits the Algarve in particular is the continued mass arrival of thousands of European pensioners, which has earned it the nickname of Europe's Côte d'Azur. In 2009, at the height of the crisis, the country had granted 10 years of tax exemption. Conditions are slowly evolving but the tax advantages remain as attractive as ever. The revitalization of tourism is considerable in the region and has also largely contributed to this economic miracle thanks, among other things, to high-end real estate projects. Tourism is part of the service sector (68.3% of the working population) which continues to grow and plays a crucial and decisive role in the Portuguese economy.What are the new economic challenges?
Former Prime Minister Antonio Costa had already faced several challenges. On the household side first, with soaring property prices in particular, a perverse effect of the tourism boom and Airbnb-style rentals, but also of the settlement of European retirees, who helped to foster a rise in prices. Challenges persist for Luis Montenegro's current government, which is nevertheless leading the country towards growth above that of the eurozone. Portuguese exports should increase, benefiting from the recovery of the global economy; inflation should continue to fall, meaning households will have more money to spend; and investments under the Recovery and Resilience Plan (PRR) should support economic growth in Portugal. The labor market should continue to be resilient in 2024, with the unemployment rate remaining below the European average. However, artificial intelligence (AI) could have a significant impact on the labor market in the future, replacing some jobs.
Lithium, the new "white gold"..
Portugal is also facing a demographic challenge, with an aging population that saw 500,000 of its citizens leave during the crisis, encouraged by the government of the time. Faced with a labor shortage, the authorities are now seeking to repatriate them. According to official estimates, around two-thirds have answered the call. As for the number of immigrants living in Portugal, according to the OECD, the figure is 30% higher in 2022 than in 2021. And if this general economic and tourism boom wasn't enough, there's now lithium, and the Portuguese state no longer wants to be content with receiving royalties from the mining activity, but to develop industrial sectors linked to the processing of the ore.
Environmental commitments
In terms of renewable energy, Portugal aims to become carbon neutral within 30 years and has decided to go faster than its European neighbours. It is constantly investing in clean electricity, solar, wind and water. More than 250 wind farms are spreading across the country and this energy alone accounts for 25% of consumption; 220 dams complete the energy landscape. In the Algarve, many companies are committed to preserving the region's unique biodiversity. These include, for example, eco-responsible real estate projects whose actions are based on bioclimatic architecture, geothermal systems or better water management. The entire country, according to observers, is on the way to becoming one of the greenest on the planet.
Marcelo, a president "de l'affect"
President Marcelo Rebelo de Sousa, in office since March 2016, renowned for his culture and sharp intelligence, cultivates proximity with the population. He can be seen swimming among the other swimmers on Cascais beach or, during disasters, taking people in his arms to console them. Better still, in August 2020, while on holiday in the Algarve, the 71-year-old president saved two little girls from drowning, an act of bravery that has been particularly commented on the networks, and rightly so. A simplicity and closeness that earned him the nickname "president of affect". His popularity rating reaches 18 out of 20, enough to make any political leader green with envy.
Things are happening in Parliament
Following the resignation in November 2023 of the socialist Antonio Costa, who had been in power for 8 years, it was the turn of Luís Montenegro (PSD, Social Democratic Party) of the moderate right to head the current government, which was installed after the early parliamentary elections of March 10, 2024 and features collaboration between the major center-left and center-right parties around Chega. His party, however, won only 29% of the vote and 80 of the 230 seats in the Assembly. With less parity than his predecessor Antonio Costa's executive, the new team comprises 10 men and 7 women (instead of the previous 19 ministries), all of whom belong to the PSD with the exception of the Minister of Defense. the country's3rd largest political force, the far-right Chega party ("enough" in Portuguese), will lead the opposition in Parliament.
