The pandemic caught Portugal in a period of economic stability and good prospects for the future. GDP growth in 2019 even exceeded the government’s expectations, similarly, public finances closed the year with a slight surplus, which happened for the first time since 1973. The surplus budget was thus planned by the government for the first time for 2020 as well.
However, the coronavirus crisis brought about a fundamental reversal, and the country was forced to urgently revise estimates of the development of economic indicators. For 2020, the economy lost more than 8%. A very serious problem was the drop in income from tourism by more than 60%, which was also reflected in the growth of unemployment. This sector generates 15% of GDP, and with related sectors even 19% of GDP, which effectively compensates trade in goods, which has been in deficit for a long time, from the point of view of the balance of payments.
In 2020, the Portuguese government supported the domestic economy and employment with an amount exceeding €22 billion. However, the vast majority of this value was made up of non-subsidy forms of aid, whether it was guarantees, or deferred tax payments or loan repayments. Net subsidies without returns for the state treasury amounted to EUR 2.79 billion.
The crisis also hit the national air carrier TAP Air Portugal, to which, in order to maintain liquidity, the government provided EUR billion in 2020 with the approval of the EC and at the same time strengthened its share in the company’s ownership structure. However, total government aid to airlines may reach up to EUR billion by 2024. In October 2020, the National Investment Plan was presented, which foresees investments of almost EUR 43 billion by 2030, with transport infrastructure among the biggest priorities.
In this context, the government places maximum emphasis on the effective use of funds from the EU Multiannual Financial Framework for the years 2021 to 2027 and from the EU Recovery Fund, the total amount of which should reach more than EUR 45 billion. In the related strategic programs, he intends to focus on long-term priorities, which are innovation, digitization and the further development of the use of renewable energy sources.
Post-COVID-19 opportunities for foreign exporters
Civil aviation industry
The aviation industry is successfully developing in Portugal thanks to the Brazilian aircraft manufacturer Embraer, which operates two factories in the country and is the majority owner of the traditional manufacturing and repair company OGMA. Currently, the construction of a third factory and the expansion of production are planned.
Czech companies from the aviation industry already cooperate successfully with Embraer. At the same time, due to the increasing air traffic, it is necessary to strengthen the ground infrastructure. The construction of a second civilian airport in Lisbon is in the preparation stage, which will be primarily intended for low-cost flights and should be built on the site of the existing military airport on the left bank of the Tagus estuary.
According to allcountrylist, the development of the green economy, including renewable energy sources, is one of the priorities of the Portuguese government, which advocates the need to accelerate the transition to circular or carbon neutral economy. The Portuguese government’s most significant bet in its efforts to decarbonize the economy and meet the goals stemming from the Green Deal at the EU level are massive investments in the production of hydrogen, with which the country would like to replace energy obtained by burning natural gas in the foreseeable future.
The government assumes that the country will be able to mobilize investments in the hydrogen chain in the next decade in the amount of over EUR 7 billion, which will create up to 12,000 jobs. jobs. Portugal plans to install electrolysers with a production capacity of 2 to GW by 2030, with 1 GW to be generated by the main project in the city of Sines. Over the next 15 years, national funds of EUR 320 million will also be allocated to subsidies for the construction and operation of cogeneration units burning biomass. This is a preventive measure, with the help of which waste from the forests is to be disposed of as part of the fight against destructive fires that recur every year.
Equipment for the production of energy from water and wind sources is partly produced in Portugal, but also largely imported, which can be seen as opportunities for Czech companies. Another opportunity is the necessary strengthening of the electricity distribution network, to which Portugal is forced to balance the fluctuations of ecological resources, and building the connection of Portugal with the Spanish and then the pan-European energy market.
On the basis of the law on military planning, the renewal of the equipment of the armed forces takes place between 2019 and 2030. The law envisages investments totaling EUR 4.74 billion, which is EUR 1.58 billion more than its previous version from 2015 for the planning period 2015 to 2026. It is planned to restore light armored vehicles (4 × 4) and modernization in the field of satellite communications, cyber defense, military information and field hospitals.
In connection with the recurring tragic forest fires, the purchase or lease of firefighting aircraft is also planned. There are also interesting opportunities here for suppliers of static monitoring equipment and drones.
Healthcare and pharmaceutical industry
The covid-19 pandemic has fully revealed the unpreparedness of the public healthcare sector in particular, which has long suffered from a lack of investment associated with a decline in the quality and availability of medical care. Increasing the volume of investments in the healthcare sector is one of the clear government priorities, already for the year 2021 the budget of the CIS public healthcare system has been repeatedly increased to EUR 1billion. In this context, new opportunities can be expected in the reconstruction of hospitals and the renewal of their equipment.
Currently, the construction of five large hospitals is being implemented throughout the country and in Madeira. The long-term deterioration of state-provided healthcare and its availability and the development of medical tourism also lead to investments in private healthcare facilities. As in other European countries, the aging population is a key factor here. In this area, there is a possible connection to the markets of other Lusophone countries.
Rail and rail transport
According to the National Investment Plan, up to EUR 10.5 billion should be directed to the construction of railway infrastructure by 2030, including the construction of a fast railway connection between the metropolises of Lisbon and Porto, which should make it possible to travel between the cities in 1 hour and 15 minutes. The completion of several more backbone lines is planned, which should improve the connection to the European railway network.
The most current is the completion of the Sines–Badajoz corridor, which includes, among other things, the construction of the Évora–Elvas section of 79 km. The value of the investment should reach EUR 900 million. In addition to the construction of new lines, electrification and modernization of existing sections are also planned, as well as the renewal of the outdated rolling stock, where the purchase of 129 train sets (62 urban, 55 regional and 12 long-distance) is planned.
An opportunity for Czech companies can also be the continuous modernization and strengthening of public transport in the largest cities of Lisbon and Porto, especially with regard to suburban railways and trams.