Business Monitor International


Portugal Business Forecast Report

Published 16 December 2014

  • 33 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
Portugal Business Forecast Report

Core Views

  • We expect Portugal's budget deficit to remain elevated in 2015-2016 due to weaker export growth and a populist policy agenda ahead of general elections in 2015, which will limit spending cuts. We furthermore caution that Banco Espirito Santo's ongoing bailout presents a significant risk to Portugal's debt and fiscal metrics from 2015 onwards.  

  • We expect the next administration in Portugal following general elections scheduled for October 2015 to win on an anti-austerity agenda, which is likely to aggravate market confidence in Portugal, dimming the country's fiscal outlook.  

  • Ailing demand from eurozone trade partners and limited competitiveness gains will chip away at the momentum behind Portugal's external rebalancing. We forecast the current account surplus to peak at 0.5% of GDP in 2015-2016 before reversing back into deficit of 0.2% of GDP in 2018.

  • While Portugal's economic recovery appears to be more resilient than we expected, prompting us to slightly adjust upward our estimate for real GDP growth for 2014, we maintain our subdued growth outlook in the coming years. The country's massive debt burden, amounting to nearly 400% of GDP, will remain a major impediment to growth, underpinning our outlook.

Forecast Changes

  • We have adjusted upward our estimate for growth for 2014 - to 0.9% from 0.6% previously, as the recovery in domestic demand has proven more resilient than we previously expected. nevertheless, we maintain our subdued growth outlook for the country in 2015-2016, mainly on account of soft external demand and Portugal's hefty debt burden, which will limit the country's growth potential.

Risks To Outlook

Downside Risks To   Economic Outlook: The public sector's debt burden - at 158% of GDP as of end-Q214 - poses the main downside risk to Portugal's economic recovery. The government's reliance on low borrowing costs means any significant blowout in credit risk could force the government to temporarily cut spending...

Table of Contents

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
Fiscal Targets To Remain Out Of Reach
8
We expect Portugal's budget deficit to remain elevated in 2015-2016 due to weaker export growth and a populist policy agenda ahead
We expect Portugal's budget deficit to remain elevated in 2015-2016 due to weaker export growth and a populist policy agenda ahead
of general elections in 2015, which will limit spending cuts
We further caution that Banco Espirito Santo's ongoing bailout presents a
significant risk to Portugal's debt and fiscal metrics from 2015 onwards
TABLE: political overview
8
Chapter 2: Economic Outlook
11
SWOT Analysis
11
BMI Economic Risk Index
11
Economic Activity I
12
Debt Is The Main Impediment To Growth
12
While Portugal's economic recovery appears to be more resilient than we expected, prompting us to slightly adjust upward our estimate
While Portugal's economic recovery appears to be more resilient than we expected, prompting us to slightly adjust upward our estimate
for real GDP growth for 2014, we maintain our subdued growth outlook in the coming years
The country's massive debt burden,
amounting to nearly 400% of GDP, will remain a major impediment to growth, underpinning our outlook
TABLE: GDP By Expenditure
12
Economic Activity II
14
Recovery On Track, But Growth To Flatten
14
Portugal's recovery will continue healing from three years of consecutive contraction in 2015-2016, with the household sector being
Portugal's recovery will continue healing from three years of consecutive contraction in 2015-2016, with the household sector being
the main driver of growth
Soft external demand, and the country's hefty debt overload will keep a lid on the recovery, underpinning our
overall subdued growth forecasts
Balance Of Payments
15
Current Account Surplus To Peak In 2015-2016
15
Ailing demand from eurozone trade partners and limited competitiveness gains will chip away at the momentum behind Portugal's
Ailing demand from eurozone trade partners and limited competitiveness gains will chip away at the momentum behind Portugal's
external rebalancing
5% of GDP in 2015-2016 before reversing back into deficit of
0
TABLE: Balance Of Payments
15
Regional Economic Piece
17
Storing Up Fiscal Problems For The Future
17
Member by member, the eurozone is abandoning fiscal targets amid political pressure
The main exception is Germany, which
further illustrates the profound schisms within the euro area
We expect the European Central Bank (ECB) to become increasingly
interventionist as official policy relies heavily on monetary stimulus
Chapter 3: 10-Year Forecast
19
The Portuguese Economy To 2023
19
Crisis An Opportunity To Improve Long-Term Growth
19
The near-term outlook for Portugal will be shaped heavily by the measures its government must undertake to corral the fiscal deficit and
The near-term outlook for Portugal will be shaped heavily by the measures its government must undertake to corral the fiscal deficit and
bring national debt levels under control
However, beyond the immediate term, Portugal will have to grapple with improving its growth
prospects if it is to escape from the debt trap
We are forecasting an economy more reliant on external demand and investment and less
on private consumption over the coming decade, but the future will depend in large part on the government's reform programme bearing
on private consumption over the coming decade, but the future will depend in large part on the government's reform programme bearing
fruit
TABLE: Long-Term Macroeconomic Forecasts
19
Chapter 4: Operational Risk
23
SWOT Analysis
23
Operational Risk Index
23
Chapter 5: Key Sectors
25
Renewables
25
TABLE: Total Elect ricit y Generation, Hist orical Data And Forecasts , 2012-2017
26
TABLE: Total Electricity Generation, Long-Term Forecasts, 2018-2023
27
Other Key Sectors
29
Table : Pha rma Sector Key Indicators
29
Table : Infrastructure Sector Key Indicators
29
Table : Telecoms Sector Key Indicators
29
Table : Autos Sector Key Indicat ors
30
Chapter 6: BMI Global Assumptions
31
Global Outlook
31
Warning Signs Growing
31
Table: Global Assumptions
31
Table : Developed States , Real GDP Growth, %
32
Table : BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
32
Table : Emerging Markets , Real GDP Growth , %
33

The Portugal Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Portugal and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Portugal's economic, political and financial prospects through end-2018, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of Portugal's economic and industry growth through end-2018.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Portugal's country risks against regional peers using BMI's country comparative Risk Rankings system.
  • Evaluate external threats to doing business in Portugal, including currency volatility, the commodity price boom and protectionist policies.

The Portugal Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the Portugal economic policy-making and performance impact on corporate profitability over 2014-2018?

BMI provides our fully independent 5-year forecasts for Portugal through end-2018 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Portugal Business Forecast Report features BMI's forecasts with supporting analysis for 2014 through to end-2018, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Rankings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2018 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Portugal and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Portugal, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Portugal over the next 5-years?

BMI's Portugal country Risk Rankings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Portugal Market - Political Strengths, Weaknesses, Opportunities and Threats facing Portugal.
  • Political Stability and Risk Assessment - BMI's Risk Rankings assess explicit short- and long-term risks to political stability; latest ankings, rankings and trends for Portugal's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark Portugal's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Rankings with SWOT Analysis - Business Environment Risk Rankings for Portugal, benchmarked against rankings for regional neighbours.

Country Competitiveness - Competitiveness of Portugal's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Rankings.

Key Sector Outlook

Which industry sectors in Portugal will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in Portugal's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2009-2013, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2014-2018, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express