PESTEL analysis of Portugal (Portugal country profile)
This detailed PESTEL analysis of Portugal (Portugal country profile) aims to explain how the country is affected by several powerful forces. Portugal is officially known as the Portuguese Republic. Lisbon is its capital and the largest city.
Political factors that affect Portugal
Portugal is a semi-presidential republic (EU, 2022). The president is the head of state who is elected to a five-year term. The prime minister (the head of government) and other government members ate appointed by the president.
Portugal has been a member of the European Union since 01 January 1986. It is also a Schengen area member, Latin Union, and the United Nations (EU, 2022). It is a founding member of NATO and OECD. It has signed agreements with many countries to deepen bilateral relationship.
Certainly, Portugal has a stable democracy with a multiparty political system. However, there are concerns in several areas such as corruption, certain legal constraints on journalism, poor conditions for prisoners, and racial discrimination (Freedom House, 2022).
Economic factors that affect Portugal
A very important factor to discuss in the PESTEL analysis of Portugal (Portugal country profile) is the economic environment. The GDP of Portugal is forecast to trend around $260.00 billion in 2022 and $280.00 billion in 2023 (Trading Economics, 2022).
However, it is worth mentioning that the global lockdowns badly affected it in 2020/21 and put massive pressure on its healthcare system. The resulting consequences may continue for quite some time causing increased poverty and inequality (OECD, 2021).
In the wake of its deepest economic challenges in decades, Portugal is trying to improve its economy. In order to do so, it is focusing more on tourism and exports while continuing to clamp down on public-sector spending. Its main exports are cars, vehicle parts, refined petroleum, leather footwear, and uncoated paper that go mostly to countries such as Spain, France, Germany, the UK, and the USA.
Portugal’s main imports are cars, crude petroleum, aircrafts, vehicle parts, packaged medicaments that it mostly buys from countries such as Spain, Germany, France, Italy, and the Netherlands (OEC, 2022).
The standard corporate income tax rate is 21%. The unemployment rate is high in Portugal. Both public and private service initiatives are required to tackle this issue swiftly and efficiently.
Social factors that affect Portugal
Portugal has a population of approximately 10.2 million (Worldometer, 2022). Most people ate ethnic Portuguese, however, there is a good number of migrant population from Brazil, Africa, and Asia. Portuguese is the official language, though it is spoken with regional variations throughout the country.
Portugal is football loving nation. Cristiano Ronaldo, best Portuguese footballer ever in history, is famous around the world. Another footballer who drew global attention was Luís Figo. Apart from football, other popular sports in the country are cycling, athletics, golf, water sports, and motor Sports.
However, there are some social challenges facing Portugal today that need to be resolved rapidly. Poverty, social exclusion, housing crisis, and migrant crisis are some of the most important issues faced by the country.
Technological factors that affect Portugal
The next factor to discuss in the PESTEL analysis of Portugal (Portugal country profile) is the technological environment. Portugal has a large proportion of people with cellular phones and computers. It also has a high rate of internet penetration. In fact, more than 84 percent of the population have access to, and uses the internet on a regular basis (Statista, 2021). These are very good numbers for an EU country.
The Portuguese ICT Sector is a highly innovative which immensely contributes to the GDP. However, the country is below the EU average when it comes to areas such as information sharing, big date, and cloud services.
Environmental factors that affect Portugal
Portugal is a beautiful country with pristine natural wonders which attract millions of tourists each year. However, its diverse geography goes from densely populated coastal areas to mountainous inland regions. This creates a number of challenges for the country in terms of sustainability, as there are natural resources are not evenly distributed across the country.
Droughts are common in Portugal, especially during summers when they are exacerbated by high temperatures. Consequently, this affects various industries (particularly agriculture) as well as the availability of drinking water.
Legal factors that affect Portugal
The last factor to discuss in the PESTEL analysis of Portugal (Portugal country profile) is the legal environment. The Portuguese Constitution, adopted in 1976 with amendments through 2005, is the supreme law of Portugal and its people. It defines the organization of the country’s institutions and guarantees a variety of rights and liberties to all Portuguese citizens.
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The employment law in Portugal has a reputation for its high degree of employment protection. As dismissal at will is forbidden, the employment market takes a long-term approach in labour retention. Employment laws have been amended as well to attract foreign investments.
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Last update: 15 January 2022
EU (2022) Portugal, available at: https://european-union.europa.eu/principles-countries-history/country-profiles/portugal_en (accessed 15 January 2022)
Freedom House (2021) Portugal, available at: https://freedomhouse.org/country/portugal/freedom-world/2021 (accessed 14 January 2022)
OEC (2022) Portugal, available at: https://oec.world/en/profile/country/prt (accessed 14 January 2022)
OECD (2021) Economic survey of Portugal, available at: https://www.oecd.org/economy/portugal-economic-snapshot/ (accessed 01 January 2022)
Statista (2021) Household internet access in Portugal, available at: https://www.statista.com/statistics/377756/household-internet-access-in-portugal/ (accessed 12 January 2022)
Trading Economics (2022) Portugal GDP, available at: https://tradingeconomics.com/portugal/gdp (accessed 15 January 2022)
Worldometer (2022) Portugal population, available at: https://www.worldometers.info/world-population/portugal-population/ (accessed 15 January 2022)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.