Sustainable Policies


Economic Policies

Showing significant gains as it emerges from austerity, Portugal falls into the lower-middle ranks (rank 28) with respect to economic policies. Its score on this measure has improved by 1.8 points relative to its 2014 level.

The Costa government continued its strategy of gradually reversing past austerity measures without undermining budgetary policy or fiscal consolidation. Growth levels have remained moderately positive, while showing some decline from previous years’ levels. Structural constraints continue to contribute to a deceleration of potential output.

The overall unemployment rates appears to have stabilized at near 6.5%. High levels of emigration continue to be a factor. Youth unemployment rates remain worryingly high. The minimum monthly wage has been steadily increased.

Income and consumption taxes remain high as a means of furthering budget consolidation. Budget deficits have been quite small, allowing the country to regain international credibility. Overall debt levels remain very high, but have begun to decline as a share of GDP. The country’s tech-startup scene is gaining international attention.

Social Policies

With the Costa government focusing on revitalizing social systems, Portugal falls into the lower-middle ranks (rank 23) in the area of social policies. Its score on this measure represents a gain of 0.6 points relative to its 2014 level.

Education levels are low and unequal by international comparison. However, decades-long polices have helped substantially increase the share of young people completing secondary school. A failure to recruit new teachers is presenting looming problems. Welfare spending has returned to pre-austerity levels. About 17.3% of the population is at risk of poverty after social transfers.

The healthcare system generally performs well, but financial constraints have led to a reduction in the quality and inclusiveness of services. Child-support credits have been expanded. The birth rate has risen, but not to pre-crisis levels. 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 may experience financial imbalances over the medium and long term. Integration policy is strong, with a welcoming framework for migrants. The naturalization process has been made easier, and the volume of requests for Portuguese nationality has risen substantially.

Environmental Policies

With reasonably good outcomes despite some policy tensions, Portugal falls into the upper-middle ranks (rank 18) with regard to environmental policies. Its score on this measure has improved by 0.3 points relative to its 2014 level.

The crisis-era decline in environmental pressure, largely attributable to decreased production, has reversed. However, the country still rates well on international climate-change policy performance indexes. A political battle over subsidies to and rents earned by renewable-energy producers has muddied the government’s otherwise pro-renewable policies.

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. Natural conservation, 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.

Robust Democracy


Quality of Democracy

With its overall legalistic society, Portugal falls into the upper-middle ranks (rank 13) with regard to its quality of democracy. Its score in this area has improved by 0.1 point relative to its 2014 level.

Electoral policies are generally fair. New funding has been provided to the campaign-finance monitoring body, relieving what had been serious financial constraints on its work. 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. An ongoing National Strategy for Equality aims to promote gender equality, prevent domestic violence and combat discrimination.

Gender and racial discrimination remains moderate concerns, with the gap between average pay for women and men having increased steadily in recent years. Cases of police violence against racial minorities have come to light. Corruption is a persistent problem, with a number of high-profile cases having recently come to trial. Courts are independent and strong.

Good Governance


Executive Capacity

With policy flexibility expanding as the crisis recedes, Portugal falls into the middle ranks (rank 20) with regard to executive capacity. Its score on this measure has improved by 0.2 points 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 were vital under the Socialist Party government in power through late 2019, which relied on other parties for parliamentary support.

A new economic-impact evaluation methodology, while still being developed, is improving RIA practices. The government consults particularly with economic actors. Communication and coordination efforts have been mostly effective despite the need to rely on non-coalition parties for parliamentary support. Regulation is generally enforced without bias, though the efficiency of enforcement is low.

The Costa government has successfully balanced austerity reductions with continued budgetary restraint. The cabinet system gives ministers incentives to follow the government program. A decentralization program is underway, with greater funding being provided to local governments along with greater responsibility.

Executive Accountability

With notable gaps in this area, Portugal scores relatively poorly in international comparison (rank 34) with regard to executive accountability. Its score on this measure has improved by 0.9 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. Budgetary restraints hampering the data-protection authority are being addressed.

The population’s surge of crisis-driven interest in policy and politics seems to be receding. 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.
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