Economy - overview:
Portugal has become a diversified and increasingly service-based economy since joining the European Community in 1986. Over the past two decades, successive governments have privatized many state-controlled firms and liberalized key areas of the economy, including the financial and telecommunications sectors. The country qualified for the European Monetary Union (EMU) in 1998 and began circulating the euro on 1 January 2002 along with 11 other EU member economies. Economic growth had been above the EU average for much of the 1990s, but fell back in 2001-08, and shrank 3.3% in 2009. GDP per capita stands at roughly two-thirds of the EU-27 average. A poor educational system, in particular, has been an obstacle to greater productivity and growth. Portugal has been increasingly overshadowed by lower-cost producers in Central Europe and Asia as a target for foreign direct investment. The budget deficit surged to an all-time high of 6% of GDP in 2005, but the government reduced the deficit to 2.6% in 2007 - a year ahead of Portugal's targeted schedule. Portugal's financial sector has been relatively insulated from the global financial crisis and the government has not spent much on shoring up banks. Nonetheless, the government faces tough choices in its attempts to stimulate the economy, while trying to keep the budget deficit within the euro-zone 3%-of-GDP ceiling. In 2009, the deficit reached 6.8% of GDP.

GDP (purchasing power parity):
$232.2 billion (2009 est.)