Portugal’s Economic Future: The Fiction of the Status Quo?

Portugal's Economy over the 2020s??

Times have certainly changed. Since 2012, both tourism and property speculation in Portugal have contributed to increasing employment numbers, helped nudge GDP back toward sustained growth, and brought global attention to Portuguese investment, thereby supporting exports and an overall increase in consumption while significantly affecting consumer confidence.

In fact, these two sectors have been a boon to the country, and also a major part of the changes in employment. For example, the number of normal people employed in the real estate sector has skyrocketed. As of November 2019, there are 6,888 real estate agencies in Portugal, with an estimated 56,000 real estate agents. Zoinks! Similarly, because tourism numbers are up, from 14.6 million short-stays in 2012 to roughly 27 million in 2019, employment with the tourism and hospitality sector has soared as well.

Yet, just because these sectors have seen staggering growth over the past seven years does not mean that they are the sectors of the future. At least, not according to some of the elite politicians. In a recent interview reported on February 16, 2020, Portugal's minister of state and economy, Pedro Siza Vieira, said that the guiding rules of the Portuguese economy (and traditional society) must begin to change according to the concepts attached to the digital economy and automation. He further posits that this digital transition can be the lever to accelerate the country's economic growth.

“The most important resource we have is the capacity to work, the intelligence and the resistance of the Portuguese. In an economy where the most important thing is knowledge, perhaps ours is the opportunity to leap in development,” adding, “…we need to stimulate the emergence of new companies that develop new business models and new products and services around the digital economy.”

I think he actually meant ‘resilience’, but while this is all well and good, there are a few things that can detract from this movement to a post-digital panacea. Let’s consider a few of the detractors:

1) the Portuguese work ethic

We have to be very careful when we consider stereotypes; however, it is important to consider that the Portuguese have typically approached working time (and in some cases, standards) with a relaxed approach that does not always place a focus on timely outcomes. While this is indeed changing, a culture of conducting business face-to-face, and ‘with time’ still remains a part of the current work culture. While it is not a bad place to do business, the overall approach of the populace to the concept of work makes it seem that any attention given to transitioning to a digital economy will be uneven, at best.

2) an aversion to (or misunderstanding of) the benefit of contracts in doing business

Something we’ve encountered in attempting to do business in Portugal is an affinity to giving one’s ‘word’ in all dealings. It seems that it’s been a time-honoured tradition of creating a reputation and maintaining it over time. Under this general way of thinking, why would a contract even be necessary? The truth is, as things speed up over time, this core value is not likely to diminish, but I believe outside influence and the volume of business transacted will naturally shift the requirements of doing business. It is my view that a transition to a digital economy will expose to the general Portuguese the value of having a ‘safety net’ surrounding their honour. However, at the outset, some of the building blocks supporting the transition are likely to be met with a questioning attitude, or in some cases, outright indifference.

3) ‘it’s never been done this way’

From what I’ve experienced so far, the Portuguese, for good or for bad, are rugged traditionalists. In most cases, I can see that they will likely remain open to the types of transition Mr. Vieira suggests, but there will remain a large percentage that question the value such a shift will hold in their lives. That said, if they are convinced that it may be in their best interest (and especially in the best interests of their family), the shift is likely to take place. For all their traditionalism, the Portuguese have a progressivism that remains a harbinger of positive changes in the future. Through proper incentives and applicability to the lives of ‘regular folk’, the concept that ‘it’s never been done this way’ will likely fall by the wayside rather quickly.

The suggestions Mr. Vieira has made concerning how the Portuguese can best take advantage of the opportunities afforded by a shift to a digital economy are specifically related to the training of people, education and engaging older generations. Based upon current training models and educational policy, this is likely to be a challenge; however, I’ll leave discussion of this for another time.

If you ask me, I will say that the environment remains ripe for foreigners with experience in the digital economy and automation to make their mark in Portugal. It’s exactly the kind of expertise the country can use as they attempt the transition. Of course, it won’t be without hiccups, but there must be another way to grow the economy other than everybody and their cousin becoming either a tour guide or a real estate agent. Developing…


by @dahungryhubs

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