By Mary Beth Double

Portugal's high economic growth rate and economic restructuring are good news for U.S. exporters, creating unprecedented business opportunities as Portugal adjusts to its European Community (EC) membership. Although overall U.S. exports to Portugal declined 14 percent during 1991, with significant declines in shipments of aircraft and parts, corn, and arms and munitions, most product sectors experienced increases.

U.S. exports 1991--$792 million U.S. imports 1991--$697 million

Continued economic growth and infrastructure developments will provide outstanding opportunities for U.S. exporters in the following sectors: telecommunications equipment, pollution control equipment, construction and mining equipment, computers and peripherals, medical equipment, process control instruments, electric power systems, and food processing and packaging equipment.

Portugal, currently serving in the rotating, six-month EC Presidency, boasts nearly full employment and one of the EC's fastest growing economies, averaging a 4.3 percent increase in GDP annually from 1986-91. Economic growth will average 2.7 percent during 1992-93, with government spending on social programs and infrastructure projects fueling growth. However, the Portuguese continue to grapple with an overheated economy, 12 percent inflation, an underdeveloped infrastructure, a chronic trade deficit, and a significant fiscal deficit. To date, monetary control measures instituted by the government with commercial lending rates well above the inflation rate have proven ineffective in controlling inflation. Wage restraints, tighter fiscal policies, and speeding privatization of state-held companies will help reduce the public debt and should help curtail inflation during 1992. On balance, Portugal has progressed well in confronting the challenges of the EC Single Market. Additional EC structural assistance funding is virtually guaranteed for some time to come, and continued inflows of foreign investment are providing the base for a modern EC market.

Cumulative U.S. investment at year-end 1990 was $590 million, with 12 U.S. subsidiaries among Portugal's 50 largest companies. U.S. investors will find numerous opportunities and generous investment incentives in this low labor-cost production center of the European market.

The Department of Commerce is planning a number of trade promotion events in Portugal. For additional information, contact the closest Commerce Department (ITA) district office or the Portugal Desk Officer at (202) 482-4508.

Source: International Trade Administration, Business America Magazine