How has tourism shaped the Portuguese balance of payments?
International tourism has played an important role in the Portuguese economy and was marked by several decisive moments since the 1960s.
In the 1960s the revenues from the travel item of the Portuguese balance of payments, henceforth referred to as travel exports (revenue from tourists that do not reside in Portugal), grew significantly, within the context of economic development and increased international stability. Improvements in the transport sector, better touristic infrastructures and increasing living standards supported this growth. Travel exports reached 6% of GDP in that decade.
In 1974, political instability led to a significant decline in tourism activities. Nonetheless, during the following decade the tourism industry gradually recovered to near 1960s-levels, bolstered by the massification of beach tourism.
In the 1990s and 2000s, travel exports declined, due to the increasing number of more competitive alternative destinations. During this period, travel exports plateaued at around 4% of GDP.
From 2010, these revenues have grown rapidly, even if briefly interrupted by the COVID-19 pandemic. In 2010, travel exports accounted for 4.2% of GDP, while in 2024 they reached 9.6% of GDP.
The expenditure of Portuguese tourists abroad has been historically lower. It hovered around 2% of GDP in the 1960s and 1990s, having only surpassed that threshold recently, reaching 2.4% in 2024.
As such, changes in the balance of the travel item of the Portuguese balance of payments have been mostly influenced by the revenue of the Portuguese tourism industry, which has grown considerably more than the expenditure of Portuguese tourists abroad.
Recently, the surplus of the travel item has led to positive balances of the Portuguese goods and services account. In 2012, the goods and services account registered its first annual surplus since the beginning of the statistical series – a feat which has been repeated every year since, barring the COVID-19 pandemic period (2020-2022).
The surplus of the goods and services account has, in turn, been a key factor in ensuring surpluses on the current and capital accounts, which had not occurred since 1993. This means that Portugal has been registering net lending capacities vis-à-vis non-residents. Historically, surpluses in these accounts reflect the performance of the travel item, showcasing how important this industry is within the Portuguese economy.
How does Portugal compare with other European Union countries?
In 2024, travel exports amounted to €28 billion, making Portugal the fifth European Union (EU) member state with the largest external tourism revenues. At the top of the list is Spain, with €98 billion, followed by France, Italy and Germany.
When it comes to revenue as a share of GDP, Portugal moves up to fourth within EU member states where international tourism has the greatest weight in the economy, surpassed only by Croatia, Malta and Cyprus.
From 2010 to 2024, Portugal achieved the highest increase of travel exports as percentage of GDP out of any EU country: 5 percentage points (p.p.).
What are the largest markets for Portuguese travel exports?
The United Kingdom, France, Germany and Spain have traditionally been the main markets behind Portuguese international tourism revenues. Since 2016, the United States of America has also become an important player, having overtaken Spain in 2024 as the fourth most significant country. Since 2010, travel exports to the USA rose from roughly 4% to over 10% of total revenue.
The increase in revenue from the group of less relevant markets is also noteworthy, from 29% in 2010 to 33% in 2024, revealing a trend towards greater diversification in the origin of international tourism revenues.
Is summer still the peak season for travel exports?
Yes, but not as prominently as before. From 2014 to 2024, travel exports have increased across all months, but summer months (June, July, August and September) have shown a relative reduction in their importance. In 2014, this four-month period recorded 49% of all travel exports, while in 2024 it was down to 47%. The biggest change can be seen in August, which accounted for 18% of annual travel exports in 2014 but only 15% in 2024.
Excluding the pandemic period, as travel restrictions influenced the seasonality of international tourism, the last 10 years saw summers months decrease their expressiveness with regards to tourism revenue. Nonetheless, this is still the season which contributes the most towards Portuguese travel exports.