Although it has suffered from the European debt crisis and has undergone the third largest IMF ever seen, Portugal has since bounced back from the recession and, as a result, has grown strong in its export sectors, but most particularly in the tourism industry.

 

The tourism sector in Portugal has been predicted to grow by around 5.3% in 2019, which is more than double the average for European countries. Tourism growth does well for the Portuguese economy and, considering that tourism brings in around 20% of the country’s overall GDP, this is a great outcome. The industry, which employs around a million of Portugals 10.3 million residents, is one of the main driving factors behind Portugal’s bounce back following the economic crisis.

 

The Effects Of Tourism On The Economy

Having increased by 8% in 2018, which was the highest growth rate in the tourism industry in Europe, Portugal’s tourism industry made €38.4 billion in revenue and was responsible for the jobs of 1 out of 5 nationals. Leisure travellers made up 85% of visitors, with 69% of visitors visiting from abroad.

 

The country’s growth in revenue is partly down to Strategy 2027, which has been implemented by the government. This is a ten-year plan for tourism which is set to boost overnight stays and visits and increase overall revenue within the sector. As well as these goals, there are also measures in place to reduce the impact of seasonal travel in order to make sure that jobs don’t go through a cycle of disappearing when there is a tourism lull. An increase in the appeal of luxury villas Vilamoura and other affluent tourist hot-spots and regions has meant that there is now a year-round appeal for those who want a last minute holiday or break.

 

To make sure that tourism isn’t having a damaging effect on Portugal’s natural landscape, which is one of the main attractions for many visitors, this plan has standards set aside for more sustainable water and energy use which is set to be applied to around 90% of tourism companies in the country.

 

Diversification Challenges

As the tourism industry continues to grow, having such a heavy reliance upon one sector can cause broader challenges, as the decline in tourism has a knock-down effect on the economy. Whilst the government puts a plan in place to guard against risks, political instability can have an effect on Portugal’s tourism industry, which is outside of the government’s control.

 

One of the single largest source of tourists to Portugal is the UK, which supplies, on average, one-fifth of all visitors to the country. It isn’t clear exactly what effects Brexit may have on holiday plans, but last year there was a 7% decrease in visitors to Portugal from the UK. A fall in the pound may also further deter British travel plans into the eurozone, so to avoid any negative effects ahead of the final Brexit deal, the Portuguese government has pledged to keep visa-free travel in place for British visitors.

 

Portugal also recently passed a law which ensures the rights of  British Citizens who live in Portugal following the possibility of Brexit reaching a no-deal. On the other hand, the instability within competitor markets has proven in favour of the Portuguese tourism industry. With perceptions of increased security risks at an all-time high, tourism to France, Egypt, Tunisia and Turkey have been declining since 2010, yet Spain, Italy, Greece and Portugal have all seen rises in tourism levels.