Portugal

Showing very significant gains in recent years, Portugal falls into the middle ranks internationally (rank 22) with respect to economic policies. Its score on this measure has improved by 1.9 points relative to its 2014 level.

The pandemic highlighted the country’s dependence on foreign tourism. As travel dried up, GDP contracted by 8.4% in 2020. However, the economy bounced back to robust levels of growth in 2021 as COVID-19 restrictions were lifted. More generally, the government continued to reverse past austerity measures without undermining budgetary policy or fiscal consolidation.

The unemployment rate rose from about 7% in the pre-pandemic period to about 8% in late 2020, but had again fallen below its initial levels by mid-2021. Continued high levels of emigration were a factor in these gains. The monthly minimum wage was increased.

The overall tax burden remains below the EU-27 average. The budget deficit reached 5.8% of GDP in 2020, with total debt rising to 135.2% of GDP. Both figures are again on the decline. Funds from the EU’s Recovery and Resilience Plan will be used for investments intended to improve innovation capacity and growth potential.

With a recent focus on revitalizing social systems, Portugal falls into the middle ranks (rank 21) in the area of social policies. Its score on this measure represents a gain of 0.8 points relative to its 2014 level.

Education attainment levels are low and the system is unequal by international comparison. Performance improvements have stagnated. A failure to recruit new teachers is presenting looming problems. Welfare spending has returned to pre-austerity levels. However, poverty and social exclusion remain serious problems.

The universal healthcare system generally performs well. Vaccination rates were the world’s highest in 2021. Financial constraints have led to a reduction in health services. Family support policies have been expanded, but a rise in the birth rate has reversed. Women’s workforce participation is often forced by generally low wages and household income needs rather than free choice.

Pension values have again been increased. The retirement age is now indexed to life expectancy. The system is likely to experience financial imbalances over the medium and long term. Integration policy is strong, with a welcoming framework for migrants. The naturalization process has recently been made easier, and the volume of requests for Portuguese nationality has risen substantially.

With reasonably good outcomes despite some policy tensions, Portugal falls into the upper-middle ranks (rank 17) with regard to environmental policies. Its score on this measure has improved by 0.4 points relative to its 2014 level.

The crisis-era decline in environmental pressure, largely attributable to decreased production, has reversed. The country achieves only mediocre ratings on international climate-change policy performance indexes.

The country has made progress in the area of the circular economy, marine conservation and water management. It is above the EU average in terms of the proportion of protected land. Nature conservation, waste and water management, urban sprawl and sustainable development remain challenges.

The country ratified the Paris climate-change accord in late 2016, and is particularly active in promoting global protection of marine environments.

With a highly legalistic society, Portugal falls into the upper-middle ranks (rank 14) with regard to its quality of democracy. Its score in this area is unchanged relative to its 2014 level.

Electoral policies are generally fair. The campaign-finance monitoring body does not have sufficient resources to accomplish its assigned tasks. Racist and fascist parties are banned. Referenda are rare, but participatory budgeting processes are used at both the local and national levels.

Financial pressures have increased volatility in media ownership. A broad range of government information is available to citizens, but it is often unorganized and difficult to understand. Civil and political rights are generally well protected. Bureaucratic inefficiencies occasionally produce serious infringements of personal rights.

Gender and racial discrimination remain moderate concerns, with the gap between average pay for women and men having increased steadily in recent years. A new anticorruption strategy has been adopted, but is viewed as insufficient by corruption activists. Courts are independent and strong.

With policy flexibility hampered by parliamentary constraints, Portugal falls into the lower-middle ranks (rank 24) with regard to executive capacity. Its score on this measure has improved by 0.1 point relative to its 2014 level.

The impact of strategic-planning bodies is small. The Prime Minister’s Office (PMO) has limited policy-assessment capabilities, while the minister of finance has been extremely influential. Informal coordination mechanisms are vital in maintaining communication between ministries and allied political parties.

A recently implemented evaluation methodology, while still being developed, is improving RIA practices. The government consults particularly with economic actors. Communication and coordination efforts were largely but not universally effective during the pandemic. Regulation is generally enforced without bias, though the efficiency of enforcement is low.

The Costa government failed to win parliamentary approval for its 2022 budget proposal, leading to a dissolution of parliament in late 2021. This hampered its ability to implement its agenda. A decentralization program is underway, with greater funding being provided to local governments along with greater responsibility.

Despite significant recent improvements in this area, Portugal falls into the lower-middle ranks (rank 27) with regard to executive accountability. Its score on this measure has improved by 1.3 points relative to 2014.

Parliamentarians have few official support resources, through formal oversight powers are generally strong. The audit and ombuds offices are independent judiciary-branch bodies. The data-protection authority is subject to budgetary restraints that hamper its ability to address issues promptly.

The population has a comparatively low level of interest in political issues. Policy knowledge remains uneven, undermined by insufficiently clear government and opposition communication and a weak civil society. While the media does offer high-quality content, financial constraints limit the ability to carry out in-depth policy analysis.

Political-party decision-making styles range widely. Unions and employers’ associations can formulate relevant policies, but are largely reactive. Non-economic interest associations continue to have little impact despite signs of economic recovery. A new generation of activists is increasingly engaging in direct action.