Portugal belongs to the euro zone since its creation, so the currency is the euro. The following graph shows the evolution of euro since its creation in 1999. However, some countries, like Brazil, started to trade with the new currency when it entered in circulation in 2002.
As we can see, there has been an appreciation of the Euro respect some currencies like UK sterling pound but generally, from 2008 there has been a depreciation of the euro due to the euro crisis. This factor has affected Portugal in the decrease of the trade deficit as we saw previously. However, Portuguese productivity has not increase in the same line as the main countries.
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Portugal ppp is about 80% of the average in the EU27, the 10th lowest in the EU.
Labor force size has remained stable at around 5.5 million – 5.6 million since 2000. The US financial crisis and the Eurozone sovereign crisis have deteriorated the unemployment situation in Portugal. The unemployment rate has increased four folds to 15.3% in 2012 from 4.1% in 2001.
Since 2009 the average real wages have declined at a much faster pace than the decline in labour productivity. This partly stems from the advent of Euro sovereign crisis which has slowed down the GDP growth in Portugal, exacerbated unemployment in the country and reduced labour productivity.
Portugal's construction sector is the country's largest employer. Its output represents around 18 percent of national gross domestic product. But the construction and real estate sector has been hit by a sharp drop in economic activity and internal consumption caused by the sweeping austerity measures required in exchange for the 78 billion euro bailout provided by the European Union and the IMF. Construction and real estate employed 670,000 workers in Portugal in 2011, compared with 830,000 in 2008.
The real estate and construction sector owes 38 billion euros in debt to the banking sector. Approximately 13,000 companies may go bust this year and 140,000 jobs may be lost. Last year the sector lost 84,000 workers. It has lost 38,000 workers in the first four months this year.
The government expects unemployment to rise to 15.5 percent this year from last year's 14 percent and to 16 percent in 2013.