SECTORAL RESEARCH
Portugal, making a presence in The Markets. Distinctive assets of the Portuguese Economy.
Francisco Mendes Palma Director NB Research & Member of the Board Banco Internacional de Cabo Verde
October 3rd, 2014
This document was written with information available up to September 29th, 2014
Exit from the Adjustment Programme
Return to growth, financial rebalancing and improved market sentiment.
Economic and Financial Adjustment Programme - Main Results and Outcome Return to economic activity growth
Improved market sentiment
YoY GDP growth since Q4 2013
10Y Government Bond yields around 3% (17.4%, Jan 2012)
Recovery by exports, investment, private consumption
Fiscal and financial rebalancing Current and capital account surplus of 1.6% of GDP Budget deficit reached 4.5% of GDP
Return of the sovereign to market financing
“Clean exit” from the Economic and Financial Adjustment Programme in May 2014
Return of main banks and non-financial corporations to market financing
Sources: INE, Ministry of Finance, Bloomberg, NB Research.
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Economic activity
GDP expanded by 0.9% in the 2Q of 2014 (YoY).
Unemployment rate
GDP growth (%, QoQ and YoY)
(Official data from INE, % Labour Force)
Q2 2014
% 4 3 Y-o-Y
2 1
0.9 0.3
0 -1 -2
Q-o-Q
-3 -4 -5 2001
2003
2005
2007
2009
2011
2013
Latest data for Q2 2014 Sources: INE, NB Research.
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Economic activity
GDP growth benefiting from performance of exports. 41% GDP
Trade Balance, Goods and Services (Year ending in month, EUR bn)
Exports profile
(23% in 1995)
(EUR billions)
20.6 19.1 Services Goods
9.8 27.2 2000
+ Services
47.3 2013
Exports breakdown (weight, %)
Extra EU Intra EU
Latest data for July 2014.
19.1
29.8
80.9
70.2
2000
2013
+ Extra EU
Sources: INE, Bank of Portugal, NB Research.
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Financial rebalancing
The external balance reached a surplus of 1.6% of GDP.
Current and Capital Account Balance (% GDP , data for year ending in each quarter)
4 2
1.6%
0 -2 -4 -6 -8
Recessions
-10 -12 -14
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Sources: INE, NB Research.
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Distinctive assets, intangible and tangible, support growth.
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Portuguese speaking countries share relevant resources.
Portuguese Language
“Resources” of the Portuguese language, 2013E
Population
GDP
International trade
Water
Arable land
Oil reserves
3.7% of world
3.8% of world
1.8% of world
16.2% of world
5.9% of world
1.8% of world
Portugal Cape Verde
Macao
Guinea Bissau São Tomé & Principe
East Timor
Equatorial Guinea
Mozambique
Brazil Angola E Estimates.
Sources: UN, IMF, BP, UN Comtrade, Banco Mundial, FAO, NB Research.
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Cape Verde - gateway to West Coast of Africa. Portuguese Language
Increased globalization gives
CEDEAO, CEMAC and CEEAC (Member countries)
centrality to Cape Verde - stage of African regional economy -
Senegal Mali
GDP 2013: USD 530 billion 374 million consumers
Níger Chad
B. F. Nigéria
Benin
as a gateway to West Africa1
Cabo Cabo Verde Verde
S.T.P.
Gâmbia
with good projection conditions
R. D. Congo
Ruanda Burundi
Angola
Cape Verde
GDP real growth rate 2014: 6.5% CEDEAO/ECOWAS - Economic Community Of West African States
International reserves: USD 14.1 billion
CEMAC/EMCCA - Economic and Monetary Community of Central Africa CEEAC/ECCAS - Economic Community of Central African States
1
Does not include Angola and DR of Congo.
Sources: CEDEAO, CEMAC, CEEAC, NB Research.
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Portuguese ports play an important role in globalization. Ports
Potential routes for Portuguese ports
Traffic to South America and Africa is growing significantly. The widening of the Panama Canal will have a positive impact on Southern Atlantic ports of Europe. Portuguese ports are favoured Containerised cargo at Portuguese ports
Sines Port - Port of Singapure Authority:
(Thousands TEUs/year)
CAGR 05-13 = 12%
gateways to European markets.
2.2
1.7
+26%
• Europe’s Atlantic gateway
(in 2013)
• 68% increase in containers • Cargo ships of 16 to 18 thousand TEUs
0.9
2005
2012
2013
Sources: IPTM, NB Research.
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Fruit & Vegetables
Alqueva, one of the largest irrigation projects in Europe. Growth in the area irrigated, 2012-2015 (ha)
Area irrigated
Enormous productive potential on
2012
56 000 ha
2013
68 000 ha
Water&Energy
2014
88 000 ha
2015
120 000 ha
Competitive capacity: property size + production security + access to water Decrease of energy and food imports Environmental sustainability Increase in food self-sufficiency and exports: Cultures in place: • Olive trees (54%) • Corn (18%) • Vines (7%) • Horticulture (6%) • Cereals (4%) Possibility to expand the irrigated area
Sources: EDIA, NB Research.
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Paper,Pulp, Pulp, Paper,
Wood&&Cork Cork The pulp and paper Portuguese industry has a prominent Wood position on the world stage.
European TOP 100 Global Forestry, Paper&Packaging Industry Companies, 2012
World ranking of cork and cork articles exports, 2013
(Number of companies by country )
(share of world exports, Percentage) 65%
6 4 3 2
16% 1
France
Spain
Portugal
Germany
Ireland
Spain
France
Austria
Norway
UK
Portugal
Finland
Sweden
4%
3%
2%
2%
1%
1% Belgium
1
China
2
USA
2
Germany
3
Italy
4
Portugal Cork exports: 65% of world cork exports Source: PricewaterhouseCoopers (2013 Edition), UNComtrade.
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Portuguese footwear is the 2nd most expensive in the world.
Shoes
Average price of footwear (exports), 2000, 2005, 2010 and 2013 (EUR)
2nd highest
23.5 16
2000
17.7
19
2005
2010
+47%
2013
average price in the world
9th world exporter of footwear
Footwear exports, 2005, 2011-2013 (EUR billions)
1.6
1.7
1.8
1.3
Portugal specializes in
high value-added leather footwear 2005
2011
2012
2013
Sources: APICCAPS, NB Research.
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Tourism has a key role in the Portuguese economy. Tourism
3rd most competitive in the
9%
Mediterranean in T&T
of GDP
European Best Destination 2014 (Porto)
12th in health quality
HEALTH TOURISM AND WELLNESS
18th safest country 19th most reputable
8%
World’s Best Sustainable Destination 2013 (Azores)
7th that welcomes tourists better
3rd best country to
of employment
BUSINESS TOURISM
invest in a second home overseas
World’s Leading Golf Destination 2013 Europe’s Leading Cruise Destination 2014 (Lisbon)
1st
2nd destination for
RESIDENTIAL TOURISM
surfing
20th in UNESCO
export sector
world heritage sites
GOLF TOURISM Europe’s Leading Island Destination 2013 and 2014 (Madeira)
Europe’s Leading Beach Destination 2013 (Algarve)
Sources: INE, WEF, WTA, NB Research.
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SECTORAL RESEARCH
more in: www.novobanco.pt /research 13
Francisco Mendes Palma Head Sectoral Strategist
RESEARCH SETORIAL
RESEARCH ECONÓMICO
[email protected]
Susana Barros
[email protected]
Luís Ribeiro Rosa
[email protected]
Conceição Leitão
[email protected]
João Pereira Miguel
[email protected]
Patrícia Agostinho
[email protected]
José Manuel Botelho
[email protected]
Celina Domingues Luís
[email protected]
Miguel Bidarra
[email protected]
Paula Dias
[email protected]
Carlos Almeida Andrade Chief Economist
[email protected]
Disclaimer This survey was prepared by NB Research - Sectoral Research for information purposes only. All its content is based on information available to the public, and was obtained from sources which we believe to be reliable, including specialised media and official sources. However, NB Research does not guarantee its accuracy or completeness. The opinions expressed in this presentation refer to the present time only and are subject to change without notice. The information and opinions contained herein are not to be construed as a recommendation for investment. NB Research - Sectoral Research does not accept any liability for any loss or damage arising from use of this presentation. Novo Banco is not bound by the opinions expressed herein and therefore shall in no circumstance or by any form be held responsible for errors, omissions or inaccurate information contained in this document or arising from the use given to the information provided. Reproduction of all or part of this publication is permitted, providing the source is expressly mentioned.
