Subchapters:
- Business Relationships
- Foreign direct investment
- FTAs and Treaties
- Development Cooperation
- Prospective fields of study (MOP)
Business relations
Trade relations with the EU
Portugal’s trade balance with EU countries has been significantly negative for a long time. As part of the balance of payments, this deficit is replaced by a surplus in terms of the exchange of services, mainly thanks to tourism. In 2021, there was a significant revival of Portugal’s foreign trade with EU countries after a decline a year earlier due to the covid-19 pandemic.
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Exports from PT to the EU (million EUR) | 37 142.1 | 40,380.1 | 42,367.4 | 38,369.9 | 45,461.0 |
| Import of PT from the EU (million EUR) | 51 330.2 | 55,388.40 | 58,990.50 | 50,887.90 | 60,925.0 |
| PT balance with the EU (million EUR) | -14,188.1 | -15,008.3 | -16,623.1 | -12,518.0 | -15,464.0 |
Source: European Commission, Instituto Nacional de Estatística (year 2021)
Trade relations with the Czech Republic
In 2021, the historically highest volume of mutual trade in goods between the Czech Republic and Portugal was recorded. The total turnover of mutual trade increased by 18.9% in 2021 compared to 2020, when Czech exports increased by 16.4% and imports from Portugal by 22.3%. The Czech Republic has maintained a positive balance of mutual trade for a long time, in 2021 it reached billion CZK.
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Exports from the Czech Republic to PT (billion CZK) | 13.6 | 15.2 | 17.2 | 15.0 | 17.5 |
| Import from PT to the Czech Republic (billion CZK) | 10.9 | 11.0 | 12.0 | 11.4 | 14.2 |
| PT balance with the Czech Republic (CZK billion) | -2.6 | -4.1 | -5.2 | -3.6 | -3.3 |
Source: businesscarriers.com
Trade relations with countries outside the EU
The balance of Portugal’s trade balance with countries outside the EU is significantly more balanced in the long term than it is in the case of intra-EU trade, which is nevertheless much more significant from Portugal’s point of view.
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Export of PT to countries outside the EU (million EUR) | 15,669.3 | 17,469.9 | 17,535.4 | 15,387.5 | 18,090.0 |
| Import to PT from non-EU countries (million EUR) | 15,563.1 | 20,373.0 | 17 120.2 | 15,219.2 | 21,772.0 |
| PT balance with non-EU countries (million EUR) | 106.2 | -2,903.1 | 415.2 | 168.3 | -3,682.0 |
Source: EIU, Eurostat, Instituto Nacional de Estatística (year 2021)
Foreign direct investment
The volume of foreign direct investment (FDI) in Portugal reached a total of EUR 154.98 billion at the end of 2021, of which EUR 117.33 billion of the total amount went to the country from the countries of the European Union. During 2021, FDI in the amount of EUR billion came to Portugal. This sum also includes Spanish petrochemical giant Repsol’s €657 million project to build two polymer plants in the Sines industrial zone, which represents the biggest foreign investment in Portugal in the past decade.
Historically, the largest foreign investors in Portugal include Spain (total position of EUR 3billion in 2021), the Netherlands (EUR 3 billion), Luxembourg (EUR 2billion), France (EUR 1billion EUR) and the United Kingdom (EUR 9.7 billion). The statistics of the central Banco de Portugal record the total position of Czech investments in Portugal at the end of 2021 in the amount of 4.47 million euros.
Regarding the sectoral structure of FDI, most investments go to the service sector, manufacturing industry, energy, water supply and construction.
The total volume of Portugal’s FDI abroad amounted to EUR 50.37 billion at the end of 2021. The main targets of Portuguese investments are the countries of the European Union (EUR 35.09 billion), however, investments in the countries of the Community of Portuguese-Speaking Countries (CPLP) are also relatively significant, amounting to EUR 6.75 billion.
The investment environment in Portugal corresponds to the standards of the member states of the European Union. The country does not pose obstacles to the entry of foreign capital, even in strategic sectors of the economy.
Czech companies investing in Portugal include, for example, Tescoma, Moravia Steel, BTL and Bramko.
FTAs and treaties
Portugal has been a member state of the EU since 1986, so its market is freely accessible from the point of view of Czech exports.
Economic relations between the Czech Republic and Portugal are further supported by the following valid intergovernmental agreements, which provide a legal framework for strengthening cooperation in individual sectors:
- Agreement on mutual protection and support of investments, Prague 13 November 1993;
- Agreement on the Avoidance of Double Taxation, Lisbon, January 5, 1994;
- Agreement on economic, industrial and scientific and technical cooperation, Lisbon, 8 July 1994.
Other bilateral instruments in the economic field include:
- Memorandum of Understanding between the Chamber of Commerce of the Czech Republic and the Portuguese Industrial Association (Associação Industrial Portuguesa – AIP) in Lisbon and the Cooperation Agreement with the Portuguese Business Association (Associação Empresarial de Portugal – AEP) in Porto (January 2004);
- Memorandum on cooperation between the Municipality of Brno and the Municipality of Porto (March 2004);
- Protocol on cooperation between CzechInvest and AICEP agencies (April 2010);
- Memorandum of Understanding between the Union of Industry and Transport and the Portuguese Industrial Association on the establishment of an Economic and Trade Council between Portugal and the Czech Republic (December 2016);
- Memorandum on cooperation between the Union of Industry and Transport of the Czech Republic and the Portuguese Trade Confederation – CIP (November 2020).
Developmental cooperation
The total volume of Portuguese development cooperation reached EUR 380 million in 2021, which was 4% more than the previous year. Portugal’s contribution to international development cooperation represented 0.16% of the country’s gross national income (GNI).
Development cooperation priorities are governed by two main criteria, which are the priorities defined by partner countries in their national development strategies and the specific potential of development cooperation through the common Portuguese language and history, which predetermines the concentration of funds in the field of education and professional training, capacity building and administrative quality of the state.
Bilateral development aid provided by Portugal represents approximately 36% of the total development aid provided and is mainly concentrated in Portuguese-speaking countries in Africa and East Timor. It reached €137 million in 2021, with the most funds going to Mozambique, Guinea-Bissau, Timor-Leste, São Tomé and Príncipe and Cape Verde. A significant part of the development aid concerns preferential credit lines for the construction of infrastructure and investments in the sectors of renewable energy, the environment, tourism and social housing.
Multilateral development aid was increased by EUR 21 million year-on-year in 2021, reaching a total of EUR 243 million. Portugal provided it in close cooperation mainly with the EU and the African Development Bank, with the highest priority being to mitigate the effects of the covid-19 pandemic and to lay the foundations for the social and economic recovery of the partner countries. At the same time, dialogue and the level of partnership with civil society organizations were strengthened, to which 7% more funds were directed than in 2020.
From the point of view of Czech companies, the way to participate in development projects in the target countries is possible mainly in the form of participation in supplier consortia, which are regularly led by important Portuguese companies.
Prospective fields of study (MOP)
Healthcare and pharmaceutical industry
The covid-19 pandemic has fully exposed the unpreparedness of the public health sector. Increasing the volume of investments in the healthcare sector is one of the government’s priorities, for the year 2022 the budget of the CIS public healthcare system was increased to 330 billion CZK. By 2023, the construction of 4 large hospitals and the reconstruction and modernization of a number of key medical facilities will begin. The planned investments will bring significant opportunities, among others, for suppliers of hospital beds, equipment and material, diagnostic devices and laboratory equipment.
Defense industry
The Military Planning Act foresees acquisition investments in the total amount of CZK 120 billion between 2019 and 2030, while total defense spending should reach 1.66% of GDP in 2024. Among other things, the purchase of aircraft, light armored vehicles and modernization in the field of satellite communications, cyber defense, military information and field hospitals is planned. In connection with the recurring tragic forest fires, the purchase or lease of aerial firefighting equipment is also planned, which, among other things, offers interesting opportunities for suppliers of static monitoring equipment and drones.
Energy industry
One of the priorities of the Portuguese government is the development of the green economy and the acceleration of the transition to a circular or carbon neutral economy. The Portuguese government’s most significant bet in its efforts to decarbonize the economy and meet the goals of the Green Deal are massive investments in the production of hydrogen, which should replace energy obtained by burning natural gas in the foreseeable future. The government anticipates that the country will be able to mobilize investments of over CZK 170 billion in the next decade through modern technologies in the hydrogen chain, while by 2030 it plans to install electrolyzers with a production capacity of up to GW. The planned modernization and capacity increase of the distribution network will also provide an interesting opportunity for Czech suppliers.
Rail and rail transport
By 2030, up to EUR 10.5 billion was to be directed to the construction of railway infrastructure, including the construction of high-speed lines between the metropolises of Lisbon and Porto and between Porto and Vigo in Spain. It is planned to complete the construction of several more backbone lines, which should improve the connection to the European railway network, as well as the electrification and modernization of existing sections and the renewal of the outdated vehicle fleet. In this context, supplier consortia will demand rails, switches, signaling devices and their own train sets. The plan is also to modernize and strengthen public transport systems in a number of cities, which provides opportunities for suppliers of trams, suburban trains and buses with environmentally friendly propulsion.
Civil aviation industry
The performance of the Portuguese aviation industry has been growing by an average of 12% per year in recent years. The main driver of dynamic growth is the Brazilian manufacturer Embraer, which operates two factories in the country and is the majority owner of the traditional manufacturing and repair company OGMA. Due to the increasing air traffic, the construction of a second civil airport in Lisbon is in the preparation stage, which will be mainly intended for low-cost flights and should grow on the site of the existing military airport on the southern bank of the Tagus estuary. In addition to expanding the supply of components for the aviation industry, opportunities for suppliers of airport and radar technology are also emerging.
