The Portuguese economy is a high income mixed economy. After 1986, when the country joined European Community Portugal managed to privatise many state-controlled companies and liberalised key areas of the economy, such as the telecommunications and the financial sector. Since then the country managed to obtain further economical liberalisation and integration in international organisations. The country entered the European Monetary Union (EMU) in 1998 and began circulating the euro on January 1st, 2002.

After the integration of the country in the European Community, economic growth had always been the case. For the most part of the 1990’s, the economic growth of the country was higher than the EU average. Though, this was diverted in the next decade as it fell back between 2001 and 2008. The global economic recession further deteriorated the situation. In the first quarter of 2009 the GDP rate of the country shrunk by -4,0%. Unemployment is another problem for Portugal. The number of unemployed people has further increased in 2009 and reached 9,1%. Furthermore in 2008, about 8% of the people that graduated from a higher educational institution were unemployed and a larger proportion was underemployed. This phenomenon is interconnected with the fact that a significant amount of Portuguese higher education institutions offer courses that are not directly connected to the labor market. This has as a result a general lack of employability and student preparation for the workplace. Consequently, the poor educational system of the country has been an obstacle to greater productivity and growth. This is further delineated by the fact that the country is 34th out of 182 countries in the Human Development Index (HDI) ranking that measures the human development of a country and is being published by the United Nations Development Program (UNDP). Furthermore the country is in the 46th position when only the adult literacy rate is measured.

Another important problem that the country faces is the limited natural resources that it has, namely those that provide for the overall energy needs of the majority of developed countries, such as petroleum, coal and natural gas. This state of scarcity created a situation of a high energy dependence on sources outside the country (87.2% in 2005). Thus, the energy system of the country is vulnerable to international price fluctuations, namely with the price of petroleum.

In an effort to reduce dependency on external sources the Portuguese Government is currently trying to use various sources of renewable energy. It is indicative that the Portuguese government set the rate of electricity that will be produced from renewable energy sources by 2010 to 45%.

Kyriazis Vasileios,

Epicos Newsletter Head Editor