THE LEGATUM PROSPERITY INDEX™ 2016

Bringing Prosperity to Life

Portugal

Ranked 25th of 149

At a glance

Ranks

25 th on the Legatum
Prosperity Index™

35th
40th
28th
61st
41st
25th
10th
42nd
27th

SUB-INDEX RANKINGS

In the Prosperity Sub-Index rankings, Portugal performs best on Personal Freedom and Safety & Security and scores lowest on the Education sub-index.

Visit our Rankings table to see how Portugal compares to other countries.

Prosperity Gap

The ‘Prosperity Gap’ takes a country's GDP and uses it as the yardstick to measure a nation's expected Prosperity Index ranking.

Portugal has consistently managed to over-deliver prosperity relative to its wealth. Its medium-sized surplus places in the global top 35 for delivery. It has improved its surplus by 32% since 2007.

Note:
In the chart above, each dot represents a country. The curve shows the general tendency with which prosperity increases as GDP per capita increases. If a country falls below the curve, then we can say that compared to all other countries, it is under-delivering prosperity for its citizens. Likewise, if a country rises above the curve, then we can say that it is over-delivering prosperity for its citizens. Learn more about the Prosperity Gap here.

Alternatively, have a look at the Prosperity Gap view on our Rankings table for a full list of countries and to see how each of them are performing on the various sub-indices.

Commentary

Looking at Portugal’s Prosperity Index score in isolation, it’s easy to think that the country didn’t pass through a period of crisis and painful adjustment. Its Prosperity Index score actually increased slightly, by 2.4%, from 2007 to 2016. This kept Portugal’s global rank in prosperity stable at 25th place.

Portugal’s overall prosperity score has continued to rise despite a deteriorating economic picture.
Portugal’s overall prosperity score has continued to rise despite a deteriorating economic picture.

Looking behind the aggregate prosperity score, however, we can see that Portugal experienced a sharp decline in its Economic Quality sub-index, going from a global rank of 29th in 2007 to one of 35th in 2016. Most of this decline occurred from 2010, the starting year of Portugal’s public debt crisis. After this point, five-year average GDP growth turned from positive to negative, the unemployment rate went from 10.8% to 14.2% and, unsurprisingly, people were less comfortable with their household income, and less satisfied with their living standards.

In the face of this economic adversity, the Portuguese have rallied to each other’s side. Portugal’s global rank in the Social Capital sub-index has increased by 21 places between 2010 and 2016, going from 63rd to 42nd. More people feel they have friends and family who they can rely in times of trouble, more people have recently helped a stranger, and more people have recently volunteered. It is encouraging that the economic crisis has been counteracted by these improvements in social capital. The economic crisis has, however, also limited some aspects of this improvement: fewer people have offered financial help to other households within the country.

Also encouraging is the tendency towards more Personal Freedom in Portugal. Rejecting the typical correlation between economic adversity and hostility to immigrants and ethnic minorities, more Portuguese feel their local area is a good place for immigrants and ethnic minorities since the start of the crisis. At a broader level, more Portuguese feel satisfied with the freedom they have to choose what they want to do with their life, with the survey responses going from 65% in 2010 to 79% in 2016.

It is a credit to the Portuguese that they have come together in times of great economic adversity, improving their social capital and personal freedom. The danger is that these positive changes are seen by policymakers as compensating for economic deterioration. The imperative to improve Portugal’s Economic Quality remains.


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Data

How to read this graph:
When comparing multiple countries on a spider chart, data points that appear
further away from the center represent a better performance to the points that are closer to the center.