The economic history of Portugal covers the development of the economy throughout the course of Portuguese history. It has its roots prior to nationality, when Roman occupation developed a thriving economy in Hispania, in the provinces of Lusitania and Gallaecia, as producers and exporters to the Roman Empire. This continued under the Visigoths and then Al-Andalus Moorish rule, until the Kingdom of Portugal was established in 1139.
With the end of Portuguese reconquista and integration in the European Middle Age economy, the Portuguese were at the forefront of maritime exploration of the Age of Discovery, expanding to become the first global empire. Portugal then became the world's main economic power during the Renaissance, introducing most of Africa and the East to European society, and establishing a multi-continental trading system extending from Japan to Brazil."Portuguese Empire" , Microsoft Encarta Online Encyclopedia 2009. 31 October 2009.
In 1822, Portugal lost its main overseas territory, Brazil. The transition from absolutism to a parliamentary monarchy involved a devastating Civil War from 1828 to 1834. The governments of the constitutional monarchy were not able to truly industrialise and modernise the country; by the dawn of the twentieth century, Portugal had a GDP per capita of 40% of the Western European average and an illiteracy rate of 74%. Portuguese territorial claims in Africa were challenged during the Scramble for Africa. Political chaos and economic problems endured from the last years of the monarchy to the first Republic of 1910–1926, which led to the installing of a national dictatorship in 1926. While Finance Minister António de Oliveira Salazar managed to discipline the Portuguese public finances, it evolved into a single-party corporative regime in the early 1930s—the Estado Novo—whose first three decades were also marked by a relative stagnation and underdevelopment; as such, by 1960 the Portuguese GDP per capita was only 38% of the EC-12 average.
Starting in the early 1960s, Portugal entered in a period of robust economic growth and structural modernisation, owing to a liberalisation of the economy. As an expression of such economic opening, in 1960 the country was one of the EFTA founding member states. Yearly growth rates sometimes with two digits, allowed the Portuguese GDP per capita to reach 56% of the EC-12 average by 1973. This growth period eventually ended in the mid-1970s, for that contributing the 1973 oil crisis and the political turmoil following the 25 April 1974 coup which led to the transition to democracy. From 1974 to the late 1970s, over one million Portuguese citizens arrived from the former African overseas territories, most as destitute refugees—the retornados."Flight from Angola", The Economist (16 August 1975)."Dismantling the Portuguese Empire", Time (7 July 1975). After nearly a decade of economic troubles, during which Portugal received two IMF-monitored bailouts, in 1986 the country entered the European Economic Community (and left the EFTA). The European Union's structural and cohesion funds and the growth of many of Portugal's main exporting industries were leading forces in a new period of robust economic growth and socio-economic development that would flourish (though with a short crisis around 1992–94) to the early 2000s. In 1991, GDP per capita surpassed the 1973 level and by 2000 it had achieved 70% of the EU-12 average, which nonetheless constituted an approach to the Western European standards of living without precedents in the centuries before. Similarly, for several years Portuguese subsidiaries of large multinational companies ranked among the most productive in the world.Microsoft Portugal novamente eleita melhor Subsidiária mundial da Microsoft International em 2008A Siemens executive, Carlos de Melo Ribeiro, pointed to labor costs and productivity as major reasons why shipping semiconductors to Portugal for final production was more advantageous than retaining the work in Germany or Great Britain – Siemens Builds on Long History in Portugal, to the Benefit of Both, by Karen E. Thuermer, October 1997, in Keller Publishing "The investment made in Portugal by the VW group has enabled "this plant to become one of the best in the VW Group and indeed in the whole automotive industry in terms of quality, productivity, absenteeism, safety, and many other decisive criteria", Gerd Heuss upon the manufacturing of car nº 1 million in Palmela", June 2003. , AICEP – Business Development Agency However, the economy has been stagnant since the early 2000s and was heavily hit by the effects of the Great Recession, which eventually led to an IMF/EU-monitored bailout from 2011 to 2014. In 2022, Portugal was on the verge of becoming by 2030 the 3rd poorest member state of the European Union (out of 27).
The country adopted the euro in 1999. Despite being both a developed country and a high income country, Portugal's GDP per capita was of about 80% of the EU-27 average., GDP per capita PPP in the EU27. Eurostat The Global Competitiveness Report of 2008–2009 ranked Portugal 43rd out of 134 countries and territories. Research by the Economist Intelligence Unit's (EIU) Quality of Life survey in 2005Quality-of-life Survey ranked Portugal 19th in the world. Portugal is home to a number of major companies with international reputation such as Grupo Portucel Soporcel, a major world player in the international paper market, Sonae Indústria, the largest producer of wood-based panels in the world, Corticeira Amorim, the world leader in cork production, and Conservas Ramirez, the oldest canned fish producer in continuous operation.
Pre-nationality Before the arrival of Romans in Iberia, the peninsula had a rural-based subsistence economy with very limited trade, with the exception of large cities on the Mediterranean coast, which had contact with Greek and Phoenician traders. Pre-Celts and Celts were some of the first groups present in the territory, with the Celtic economy centered on cattle raising, agriculture, and metal working.
Roman province
The territory's mineral wealth made it an important strategic region during the early metal ages, and one of the first objectives of the Romans when invading the peninsula was to access the mines and other resources. After the Second Punic War, from 29 BC to 411 AD, Rome governed the Iberian peninsula, expanding and diversifying the economy, and extending trade with the Roman Empire. Indigenous peoples paid tribute to Rome through an intricate web of alliances and allegiances. The economy experienced a major production expansion, profiting from some of the best agricultural lands under Roman hegemony and fueled by roads, trade routes, and the minting of coins, which eased commercial transactions. Lusitania developed, driven by an intensive mining industry; fields explored included the Aljustrel mines (Vipasca), São Domingos, and Riotinto in the Iberian Pyrite Belt, which extended to Seville, and contained copper, silver, and gold. All mines belonged to the Roman Senate, and were operated by slaves.
Subsistence agriculture was replaced by large farming units (Roman villas) producing olive oil, cereals, and wine, and rearing livestock. This farming activity was located mainly in the region to the south of the Tagus River, the third largest grain-producing area in the Roman Empire.
There was also development in fishing activity, producing the valued garum or liquamen, a condiment obtained from the maceration of fish, preferably tuna and mackerel, exported throughout the entire empire. The largest producer of the entire Roman Empire was in Tróia Peninsula, near modern Setúbal, south of Lisbon. Remains of garum manufacturing plants show a sharp growth of the canning industry in Portugal, mainly on the coast of Algarve, but also in Póvoa de Varzim, Angeiras (Matosinhos), and the estuary of the Sado River, which made it one of the most important centers for canners in Hispania. At the same time, specialized industries also developed. The fish salting and canning in turn required the development of salt, shipbuilding, and ceramic industries, to facilitate the manufacture of amphorae and other containers that allowed the storage and transport of commodities such as oil, wine, cereals, and preserves.
Germanic rule
With the decline of the Roman Empire, circa 410–418, Suebi and Visigoths took over the power vacuum left by Roman administrators and established themselves as nobility, with some degree of centralized power at their capitals in Braga and Toledo. Although it suffered some decline, Roman law remained in the Visigothic Code, and infrastructure, such as roads, bridges, aqueducts, and irrigation systems, was maintained to varying degrees. While trade dwindled in most of the former Roman lands in Europe, it survived to some degree in Visigothic Hispania.
Al-Andalus In 711, Moors occupied large parts of the Iberian Peninsula, establishing the Al-Andalus. They maintained much of the Roman legacy; they repaired and extended Roman infrastructure, using it for irrigation, while introducing new agricultural practices and novel crops, such as sugar cane, rice, citrus fruit, apricots, and cotton. Trade flourished with effective systems of contract relied upon by merchants, who would buy and sell on commission, with money lent to them by wealthy investors, or a joint investment of several merchants, who were often Muslim, Christian, and Jewish.
Little is directly known from the economic structures of the region due to the paucity of Arab sources. It is however possible to advance a few assertions. The constant warfare between Muslims and Christians and among Muslims certainly costed the region dearly and must have participated to the rampant problems of underpopulation experienced by the Gharb Al-Andalus. As a matter of example, several attempts to repopulate the regions north of Coimbra to guarantee a line of defense against the Christian kingdom failed. The economy was heavily influenced both by structural Islamic habits (creation of cities) and the direction chosen by the dominating Muslim ruler of the Maghrib and al-Andalus. For instance, the great interest paid by the Almohad dynasty to the Atlantic helped develop the military and civilian (trade, fishery) activities of the western Iberian ports such as Sevilla, Lisbon, etc. Despite a general impression of sustained development, specially during the 10th and 11th centuries when the area witnessed a noticeable demographic expansion, the Gharb al-Andalus also underwent some dramatic episodes such as the great famine of 740 which decimated the Berber colonists of the Douro region.
Business partnerships would be made for many commercial ventures, and bonds of kinship enabled trade networks to form over huge distances. Muslims were involved in trade extending into Asia, and Muslim merchants traveled long distances for commercial activities.Edson and Savage-Smith "Medieval Views of the Cosmos"(2004), pp. 113–116 After 800 years of warfare, the Catholic kingdoms gradually became more powerful and eventually expelled the Moors from the peninsula. In the case of the Kingdom of Portugal it happened in the 13th century; in the Algarve. The combined forces of Portugal, Aragon and Castile defeated the last Iberian Muslim strongholds in the 15th century.
Kingdom of Portugal
In 1139, the Kingdom of Portugal achieved independence from the Kingdom of León, having doubled its area through the Reconquista (the reconquest of former Christian lands to the Muslim rulers established in the Iberian Peninsula) under Afonso Henriques, first King of Portugal. His successor, Sancho I, accumulated the first national treasury, and supported new industries and the middle class of merchants. Moreover, he created several new towns, such as Guarda in 1199, and took great care in populating remote areas.
Middle Ages