The Portuguese Escudo is the currency of Portugal. Until the introduction of the euro in 2002, 100 centavos made up escudo. Its symbol, similar to the US Dollar ($) except for with 2 bars instead of one, was called the cifrao. Inflation made the currency virtually irrelevant, and centavo coins were withdrawn from circulation. Prior to its elimination, the exchange rate was 200.482 to one euro. The last 100-escudo note showed a portrait of Fernando Pessoa, a famous Portuguese writer. The ISO code for the escudo was PTE. Escudo is the Portuguese word for shield.
| Moody's Rating |
| Aaa |
| S&P Rating |
| AA |
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Political Structure
Portugal's government is a parliamentary democracy. It has 18 districts and 2 autonomous regions. The executive branch is headed by the president, who is elected by popular vote for a 5-year term and the prime minister, who is appointed by the president on the recommendation of the prime minister. The leader of the majority party is usually appointed as the prime minister by the president. The legislative branch, the Assembleia da Republica has 230 seats, and its members are elected by popular vote to serve 4-year terms.
Prominent Figures
The president of Portugal is currently Anibal Cavaco Silva. The prime minister is Jose Socrates, elected in 2002. A board of directors, led by the governor, Vitor Manuel Ribeiro Constancio, heads the Bank of Portugal.
Unique Characteristics
Compared with the rest of Europe, Portugal has surprisingly low labor costs, although wages have been increasing for the last couple of years. In 2001, average wage costs in Portugal were €7/hour, while Germany had €26.7/hour, and the EU had €21.4/hour. Moreover, Portugal has been having a harder time with industrial restructuring and as a result the industrial sector often lacks economies of scale (increase in efficiency as number of goods produces increases). However, this is slowly turning around as clothing and textiles have begun to modernize the exporting industry.
Low labor costs together with access to the EU market have increased the number of foreign investing in automotive and electronics sectors.
Key Economic Factors
Portugal, similar to its European neighbors, has developed a strong service-based economy over the last three decades. In 1960, Portugal showed agricultural and fishing sectors accounting for 24% of the GDP, while today it only accounts for 3.3%. However, low productivity in agricultural sectors has resulted in a loss of a competitive advantage relative to Spain and France. For a developed country, the income per head is low, an approximate $18,527; however, this number has increased since 2002. This is the second lowest income per head for a country in the EU. Growth has been increasing for many years, especially in the construction and services, financial, retail, and telecoms sectors. Tourism has also been on the incline, making a huge impact on mass-market beach holidays.
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