Sunny Portugal with an expansive coastline to the Atlantic is a dream vacation spot. Once a global maritime and economic power during the 15th and 16th centuries, today it attracts more than 17 million visitors per year, last checked in 2019 during the hay days of tourism. But how attractive is Portugal for investors looking to expand their business, or for skilled immigrants who are looking for a new place to settle?
Let’s take a closer look at:
- Ease of doing business in Portugal;
- Portugal’s global competitiveness and talent attraction potential;
- The environmental performance and tourism in Portugal;
- Quality of life in Portugal and its performance as a ‘Good Country’;
- The soft power of Portugal and the value of its nation brand
Ease of doing business
According to the World Economic Forum’s Global Competitiveness Report 2019, Portugal was in the 34th position among 141 countries for its productivity, growth, and human development. Portugal shows good performance in the Healthy Life Expectancy pillar but needs to improve in the Innovation Capability pillar.
Though the Global Competitiveness Report 2020 has paused the comparative country rankings due to the upheaval caused by the pandemic, countries have been rated for their performance in 11 emerging priorities towards achieving economic transformation. Portugal scores well in upgrading infrastructure to accelerate the energy transition and broaden access to electricity and ICT with 87.8 points but performs poorly in eldercare, childcare, and healthcare infrastructure with 31.4 points.
The IMD 2021 World Competitiveness Ranking (assesses the extent to which a country promotes the prosperity of its people by measuring economic well-being) ranks Portugal 36th of 64 economies worldwide. Portugal’s competitiveness landscape has improved by at least eight positions over the years in Economic Performance (ranks 43rd), Government Efficiency (38th) and Business Efficiency (38th), but has remained in the 27th place in Infrastructure.
Portugal’s capacity and readiness to adopt and explore digital technologies stands 37th out of the 64 countries in IMD’s 2021 Digital Competitiveness Ranking. Its performance in the Knowledge (33rd), Technology (38th), and Future Readiness (41st) pillars have taken a significant hit since 2016, implying serious calls for improvement.
The latest World Bank Ease of Doing Business 2020 report reveals that Portugal has slipped from 34th place in 2019 to 39th in 2020. While the 2019 report pointed out how Portugal made registering property more burdensome by reducing the number of officials that can register property transfer, the ease of doing business in 2020 has other challenges. Portugal scores 90.9 for starting a business and 100.0 for trading across borders, but only 62.0 for protecting minority investors and 45.0 for getting credit.
Portugal is in the league of global top 25 performers with the 25th rank in the latest Bloom Consulting Country Brand Ranking© Trade for 2019-2020. This is a significant improvement from its 30th place in the previous edition of the ranking.
According to the 2021 Best Countries Report, Portugal’s ranking has seen a steep decline from its 24th position in 2020 to 29th position in 2021 out of the 76 countries surveyed. Portugal’s ranking in the Quality of Life sub ranking has declined from the 17th spot to the 21st but its sub ranking in Open for Business has improved from 22nd to 19th.
In Brand Finance’s latest Nation Brand 2020 study, Portugal ranks 43rd, an improvement in five places from the 48th spot in 2019.
The IMD World Talent Ranking 2020 (assesses the status and development of competencies necessary for enterprises and the economy to achieve long term value creation) ranks Portugal 26th most competitive regarding appeal to talent, among 63 economies worldwide. Portugal’s strongest performance at the factor level is in the Female Labor Force with 4th place worldwide and Language Skills, ranking 7th.
The country’s investment in and development of home-grown talent has declined significantly, dropping from 8th place in 2016 to 22nd in 2020, which calls for action. Portugal’s appeal for expats and the extent to which a country taps into the overseas talent pool has improved from 40th in 2016 to 33rd spot in 2020. Also, the Readiness – availability of skills and competencies in the talent pool – has improved from the 31st to the 24th place.
The annual European Innovation Scoreboard (provides a comparative assessment of research and innovation performance of countries) considers Portugal as a Moderate Innovator. Portugal’s strengths are in attractive research systems, digitalisation and the use of information technologies. According to the study, the recent decline in innovation performance is due to reduced R&D expenditure in the business sector, patent applications, and environment-related technologies, to name a few.
Portugal’s soft power
How much global influence does Portugal have thanks to its culture, education and entrepreneurship? Portugal continues to remain in the 28th position for its soft power, among 105 countries around the world in Brand Finance’s Global Soft Power Index 2021.
The report also performed an analysis of seven Soft Power Pillars to determine the soft power superpower by assigning gold, silver, or bronze medals for the best-performing countries. The pillars analysed were Familiarity, Reputation, Influence, Business & Trade, Governance, International Relations, Culture & Heritage, Media & Communication, Education & Science, People & Values, and COVID-19 Response.
While Switzerland was the winner with 17 medals, Portugal garnered two medals – silver for People & Values and a bronze for Culture & Heritage.
The Soft Power 30 Index for 2019 ranks Portugal 22nd, the same as in the previous year. With the financial crisis slowly going out of sight, Portugal is witnessing positive sentiment from credit rating agencies and foreign direct investment.
Future Brand’s Country Index 2020 (evaluates the image and reputation of the World Bank’s top 75 countries by GDP) ranks Portugal 24th globally, an improvement in one position from 2019.
The Tripadvisor Travelers’ Choice 2021 Best of the Best list drawn from the experiences of travellers in 2020 ranks Lisbon as the 21st most popular destination in the world. The Praia da Falesia beach in the tiny fishing town of Olhos de Agua is ranked 13th best out of the Top 25, according to travellers.
Portugal ranks as the 7th Best Destination For Travel Experiences in the world, according to travellers’ ratings and reviews on Tripadvisor, with an overall rating of 4.52 out of 5.
The World Economic Forum’s Travel & Tourism Competitiveness Index 2019 ranks Portugal 12th, an improvement in two positions from the 2017 index. Portugal ranks 1st in the Tourist Service Infrastructure pillar, 9th in Safety and Security, 12th in Prioritization of Travel & Tourism, 15th in Cultural Resources and Business Travel but lags behind in Business Environment (rank 54), Price Competitiveness (rank 95) and Environmental Sustainability (rank 86).
There has been a significant rise in Portugal’s global ranking in the 2019 – 2020 Bloom Consulting Country Brand Ranking© Tourism. It has improved in six places to take the 14th position among the 25 top-ranking countries globally and 7th place in Europe. Portugal has been attracting a constant stream of international visitors, judging by its online search performance and social media presence.
The European Environment Agency’s 2021 report on air quality in European cities found Funchal in Portugal as the 3rd cleanest city with 4.2 μg/m3 of fine particulate matter (well under the annual guideline value of 10 μg/m3 set by the World Health Organization). Other major cities in Portugal with good air quality with <10 μg/m3 of fine particulate matter are Faro (27th), Sintra (51st), Aveiro (71st), and Lisbon (100th).
Among the 180 countries assessed in the 2020 Environmental Performance Index (EPI) for their state of sustainability, Portugal has slipped from 26th place in 2018 to 27th in 2020.
Portugal is in a good place with respect to its Air Quality (15th) and Fisheries (12th) but needs to work on improving its Biodiversity (52nd), Ecosystem Services (174th), Pollution Emissions (30th), and Climate Change (44th).
For the environmentally conscious, Portugal’s state of sustainability may seem disappointing. The report points out how Portugal fares poorly compared to its peers for its dependency on coal and decreased reliance on hydropower energy, owing to droughts. To further complicate things, the country – which is easily prone to droughts and forest fires – is Europe’s largest exporter of eucalyptus pulp, a tree known for sapping the water table.
On similar lines, Portugal’s progress made towards the UN’s 17 Sustainable Development Goals (SDGs) has dropped from the 25th spot in 2020 to the 27th in 2021, according to the Sustainable Development Report 2021. Portugal had major challenges in achieving its goals in fighting hunger, climate change, and safeguarding life below water in the 2020 report. These challenges continue to remain in 2021, along with poor progress made in safeguarding its biodiversity on land. Like every other nation on the planet, Portugal struggles to combat climate change.
Quality of life
Expats looking to move to the Iberian Peninsula have lots to cheer about as Portugal is ranked the 5th best among 59 countries for expats in 2021, according to Internations Expat Insider 2021 report. The high quality of life (ranks 3rd in this index) is its biggest draw, as expats love the local leisure and socializing options, sunny climate and weather in general, and peaceful atmosphere. Expats find it easy to settle in Portugal as it is ranked 9th worldwide for the comfort provided and 2nd best at Feeling at Home and 6th best for Friendliness.
Portugal’s access to healthcare and its affordability (ranks 21st) are reasonable and so is travel and transportation (ranks 22nd).
But what about job opportunities, work-life balance and job security for international residents? Portugal ranks 36th among 59 countries in the Working Abroad Index.
Portugal’s worst performance is in the Career Prospects & Satisfaction subcategory (44th place), with foreign residents being displeased with local career opportunities. Expats living there are particularly dissatisfied with the state of the local economy. Portugal fares comparatively better with respect to Work & Leisure (18th rank).
Portugal is a prime destination for ERASMUS+ and international students on study abroad courses, according to The Class Annual Trend Report 2020. Universities of high repute – like the University of Lisbon, Universidade do Porto, and the University of Coimbra – and good quality of life are the greatest appeals for students.
Investment in international student accommodation is ripe as there is a demand for alternative student housing and non-university student housing.
Portugal’s ability to volunteer or part with money or time for the betterment of society has seen a staggering decline from 88th position in 2019 to 113th in 2021. The latest Charities Aid Foundation World Giving Index 2021 considers Portugal as one of the lowest-scoring countries in 2020, which can be attributed to the challenges caused due to the pandemic.
Individuals planning to move to Portugal can live a worry-free life, as the Vision of Humanity’s Global Peace Index 2021 ranks Portugal as the 4th most peaceful country in the world.
The World Happiness Report 2020 ranked Portugal in 59th place (measuring the general state of well-being based on how people rated their lives, focusing especially on the environment – social, urban, and natural). Whereas in 2021, the report focussed on the effects of COVID-19 on the quality of life and based on the opinion of its own citizens, Portugal is ranked 58th place worldwide.
According to the OECD Better Life Index, Portugal showcases average performance in only a few measures of well-being relative to most other countries. Portugal ranks above the OECD average in housing, work-life balance, personal security and environmental quality, but below average in income and wealth, health status, social connections, civic engagement, education and skills, subjective well-being, and jobs and earnings.
Furthermore, the Portuguese are less satisfied with their lives than the OECD average. When asked to rate their general satisfaction with life on a scale from 0 to 10, Portuguese people gave it a 5.4 grade on average, one of the lowest scores in the OECD, where the average life satisfaction is 6.5.
In the World Economic Forum Social Mobility Index 2020 edition, Portugal ranks 24th among the 82 global economies benchmarked. Among the ten pillars assessed, Portugal fares well in Working Conditions, Social Protection, and Inclusive Institution pillars and needs significant improvement in Fair Wage Distribution, Work Opportunity, Education and Lifelong Learning.
Transparency International’s latest 2020 Corruption Perceptions Index ranks Portugal 33rd out of 180 countries, from 30th place in 2019. On a scale of 1 to 100 with 100 being very clean, Portugal scores 61/100 compared to 62 in 2019.
According to the Institute for Economics & Peace’s Economic Value of Peace report (measures the global economic impact of violence and conflict), Portugal is one of the most peaceful countries in the world with the least economic cost of violence. Portugal ranks 3rd in the 2020 Global Peace Index, one position up from 4th place in 2018.
The Happy Planet Index (measures how well nations are doing at achieving long, happy, sustainable lives for their residents) assigns Portugal a Happy Planet Index Score of 24.8. Portugal’s average performance earns it the 79th spot, out of 140 countries. The country performs pretty well in life expectancy, wellbeing and addressing inequality but fares poorly for its ecological footprint.
Portugal a ‘Good Country’?
Simon Anholt’s Good Country Index 2020 ranks Portugal in 35th place, among 149 countries, for its contribution to the common good of humanity and the planet, and what it takes away in return relative to its size.
Also, there has been a steady decline in Portugal’s image as a ‘Good Country’ from its 23rd position in 2016 to 24th in 2017 and 30th in the 2018 Good Country Index. It has to be noted that, while Portugal’s contribution to International Peace and Security improved over the years from 131st position to the current 78th place, its contribution towards Prosperity & Equality has dropped significantly from 12th to 98th position in 2020.
Analysis by Supriya A N. Last updated August 2021.
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