Money & costs
Portugal remains excellent value for money, whether you’re travelling on the cheap or trying to spend your inheritance. If you’re on a shoestring budget, you could get by on around €30 per day, as long as you camp (around €4 per person, plus a charge for your tent and car) or stay in youth hostels (€11 to €16 for a dorm bed), buy your own food and do free stuff such as lying on the beach. Travelling in the low season will help, too.
Many museums are free on certain days (often Sunday). Purchasing family tickets to attractions usually saves a few euros, and student or senior cards often get you discounts. In restaurants you can sometimes share a main course or order a meia dose (half serving). Drink promotions are prevalent in the Algarve, particularly during happy hour, making for a cheap night out.
Midrange travellers can expect to pay around €40 to €50 per person per day, while a cushier holiday with more-stylish digs and fancier meals and cocktails starts at around €90 per person per day.
If you’re satisfied with the service, tip 5% to 10%. Bills at pricier restaurants may already include serviço (service charge). After a snack at a bar or café, some shrapnel is enough. Taxi drivers are not generally tipped, but 10% for good service would be appreciated.
While economic growth in Portugal remained above the EU average for much of the 1990s, it hit a speed bump in 2000, and has been in a serious slump ever since. Its GDP shrank in 2003, and recovered slightly in subsequent years, but still only grew by 1% in 2006, making it one of the lowest in the EU. At present, Portugal’s per capita GDP lags behind that of Slovenia, Malta, Cyprus and, since 2002, Greece.
Unemployment has also slowly risen over the last five years, peaking at 7.6% in 2005, although in some areas it was more than twice that. To add to the country’s financial woes, the budget deficit and consumer prices have continued to rise, while wages increased only slightly. All this has made for a rather unhappy population.
The government has certainly had its work cut out for it, trying to walk a fine line between keeping the EU happy (ultimatum from Brussels: ‘reign in your budget deficit!’) and helping its own citizens. As is often the case, economic priorities trumped social concerns, and the government has adopted austere measures to bring the country economic equanimity. Measures it undertook included raising the value-added tax (VAT) from 19% to 21%, initiating a hiring and promotion freeze on various parts of the public sector and reforming pensions – never a pretty topic in a country with 17% of its population over the age of 65.
In other economic areas Portugal still lumbers beneath a significant trade deficit; it spent €20 billion more than it exported in 2005. Incidentally, Portugal’s leading market for both imports and exports is Spain, though Germany, France, Italy and the UK are also players. The Portuguese economy is still based on traditional industries such as textiles, clothing, footwear, cork, paper products, wine and glassware.
Agriculture, once a mainstay of the economy, now only accounts for 3% of GDP, though it employs 12% of Portugal’s workforce. This statistic is a small indication of the country’s old-fashioned tendency towards manpower over machinery – and a reason why it has difficulty competing with cheaper, better located Eastern European countries that are the new kids on the EU block.
The service industry, particularly tourism, is playing an increasingly important role, and certainly more changes are underfoot as Portugal stumbles its way towards the light of economic stability. On the horizon, the country will lose its training wheels as the EU cuts its funding from 2007 to 2013 by 10%, a whack of more than €2 billion.
Since 1 January 2002 Portugal has used the euro, along with Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands and Spain. Prices jumped, but the easy conversion (100 escudos equalled €0.50) made the changeover less painful than in other countries. Some people still talk in escudos.
Banks and bureaux de change are free to set their own rates and commissions, so a low commission might mean a skewed exchange rate.
These are a safe way to carry money as they will be replaced if lost or stolen, but are less convenient than the card-in-machine method. Amex, Thomas Cook or Visa are most widely recognised. It’s best to get cheques in euros, and keep a record of the ones you’ve cashed in case you do mislay them. However, although travellers cheques are easily exchanged, with better rates than for cash, they are poor value because commission is so high.