Pressure on companies, ambitious stimulus facing implementation hurdles

A1

LOW RISK for enterprise

  • Economic risk

  • Business environment risk

  • Political risk

  • Commercial risk

  • Financing risk

  • Economic risk

  • Business environment risk

  • Political risk

  • Commercial risk

  • Financing risk

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GDP
USD1281,1bn (World ranking 14, World Bank 2020)
Population
59,3mn (World ranking 24, World Bank 2020)
Form of state Parliamentary monarchy
Head of government Pedro Sánchez
Next elections General elections, 2023
  • Good performance and competitiveness in some specific sectors, although competitiveness gains are starting to reverse
  • Presence of large international companies
  • Fiscal deficit now below 3% of GDP, and public debt-to-GDP ratio has started to decrease
  • Bridge between Latin America and the rest of the world
  • Large economy
  • Good infrastructure network
  • Still high public debt (>97.4% of GDP)
  • High private debt
  • Still high unemployment (14.5%) despite progress
  • No recent structural reform on education and training
  • Fragmented political landscape, internal tensions over sovereignty issues (Catalonia)

Trade structure by destination/origin

(% of total, 2020)

Exports Rank Imports
France 15.4%
1
11.8% Germany
Germany 10.8%
2
10.2% China
Italy 7.5%
3
9.9% France
Portugal 7.3%
4
6.2% Italy
United Kingdom 6.0%
5
4.9% United States

Trade structure by product

(% of total, 2020)

Exports Rank Imports
Road vehicles 15.4%
1
10.2% Road vehicles
Vegetables and fruits 7.2%
2
7.2% Petroleum, petroleum products and related materials
Medicinal and pharmaceutical products 4.6%
3
5.7% Electrical machinery, apparatus and appliances, n.e.s.
Electrical machinery, apparatus and appliances, n.e.s. 4.1%
4
5.4% Medicinal and pharmaceutical products
Articles of apparel & clothing accessories 3.9%
5
5.3% Articles of apparel & clothing accessories
Payment terms and late payment interest are regulated in accordance with applicable EU rules; however the standards put in place are among the most lenient in Europe. As a result, DSO remains excessive at around 69 days.

  • Low

  • Medium

  • Sensitive

  • High

  • Payments

  • Court proceedings

  • Insolvency proceedings

  • Payments

  • Court proceedings

  • Insolvency proceedings

The court process is a major complication when it comes to collecting debt and it is advisable to first conduct negotiation with the support of collection specialists. When court is needed, Alternative Dispute Resolution methods and foreign courts (EU judgments will be fairly enforceable in Portugal) may be worth considering in order to avoid inefficient domestic courts.

Despite reforms conducted in 2012 to increase company rescue possibilities, insolvency proceedings often lead to the liquidation of the company and it is rare for unsecured debtors to recover their debt.

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