Portugal FOREIGN ECONOMIC RELATIONS
The beach at Nazaré
Courtesy Alan J. Savada
Amoreiras shopping and office complex in Lisbon
Courtesy Alan J. Savada
After becoming a charter member of EFTA in 1959,
Portugal
became increasingly open to the rest of the world through
international trade and other payment flows. In 1990
exports of
goods and services accounted for about 37 percent of
Portugal's
GDP, and imports of goods and services represented about
47
percent of GDP. The accession of Portugal to the EC on
January 1,
1986 required fundamental changes in the country's
commercial and
foreign investment policies. A seven-year transition
period
ending in 1993 would eliminate most barriers to trade,
capital
flows, and labor mobility among the twelve EC member
countries.
During this period, Portugal was a net recipient of EC
financial
transfers to help modernize its agricultural and
industrial
sectors for competition in the single market.
To rein in domestic demand growth--mainly the result of
the
public sector deficits after 1973--the Portuguese
government was
obliged to pursue IMF-monitored stabilization programs in
1977-78
and 1983-84 to help achieve a return to current account
equilibrium in the balance of international payments.
Building on
the 1983-85 stabilization program and in the context of
Portugal's accession to the EC, the Council of Ministers
introduced in March 1987 the Program for the Structural
Adjustment of the Foreign Deficit and Unemployment (Plano
de
Correcção Estrutural do Déficit Externo e
Desemprêgo--PCEDED), a
medium-term program aimed at a lasting correction of
structural
imbalances--inflation, fiscal deficit, external deficit,
and
unemployment. The program's macroeconomic approach
included a set
of articulated measures involving fiscal, monetary,
exchange, and
incomes policy. As an instrument of the government's
"controlled
development strategy," this program was to be implemented
in two
stages covering the periods 1987-90 and 1991-94 and was
designed
to reduce Portugal's susceptibility to external shocks by
strengthening especially the energy and agricultural
sectors.
Data as of January 1993
|