A Tourist Guide to Lisbon and Portugal's Economy

Lisbon and Portugal’s economy has never been terribly strong with the pinnacle pre the introduction of the Euro. The mid 90’s could be consider Portugal’s recent “golden” age with huge investment provided by the European union to improve a sweeping wrath of infrastructure and massive investment of industry.

It was a shame that not many Portuguese appreciated this huge surge in investment, as it coincided with the introduction of free movement within union members so many skilled workers left for countries were the wages were significantly higher. The expectations of the few who remained in Portugal soared with the successful bid for Expo (1998) and the tantalising dream of hosting a major football contest (Euro 2004).

Late 1998 was the apex of Lisbon’s golden age; the world had marveled at the ocean theme Expo, newly constructed bridges, roads and metro lines had opened on time and there was realisation that Portugal would be accepted into the exclusive Euro monitory system which was implemented in 2002. Would this national optimism which was under pinned by the finances of Europe lead Portugal’s economy to rival Germanys 12 years later?

In a simple answer no.

The introduction of the Euro did boast Portugal’s and Lisbon economy for a brief while as founding members identified that wages where so much lower, in this period giant manufacturing plants opened. Soon though other countries had even lower wages and more lax employment laws or tax regulations and some of the original manufacturing has remained a lot has left. This has meant that a relatively high proportion of Portugal’s economy is regarded as service industry which in true terms means tourism.

Even the gold pot of tourism is taking a battering as the Euro strength increases making it more expensive for non-euro countries to visit while pushing up the prices of the services. This coupled with the down turn in the world economy is reducing the number of visitors to Portugal as a whole, this can be simple seen by the number of internet users performing searches for Portugal holidays and related searches is down by 4% from 2009 to 2010.

As Europe focus on the east the most westerly country struggles to cope under a succession of weak coalition governments. To stop Portugal slipping further from the rest of Europe taxes and cut backs have been applied where ever possible. The actual poor state of Portugal’s finances have been over shadowed by the high profile issues of Greece and Ireland.

And now, as predicted by many, the portuguese government has been forced to ask for support from the European central fund. The increases in interest rate will only make it harder for portugal to escape from its mounting dept - expect major cuts in services and more prices rises. Only a slight unconvinced to tourists to Lisbon but devastating to the residents of the city. If someone has given you good service offer a decent tip!