How Portugal Confronted the Coronavirus

First imposed on March 18, Portugal is now mulling an exit from lockdown that commenced on Monday, May 4, to be executed in three phases over multiple 15-day periods. Small neighbourhood shops, hairdressers, car dealerships, and bookshops will be allowed to open first. Remote work will still be encouraged and wearing masks in public will be mandatory.

“We know this process has risks,” Prime Minister Antonio Costa told a news conference. “We know that as we open up various activities, the risk of transmission will increase.” But he added, “I will never be ashamed to take a step back if necessary for the safety of the Portuguese.”

Costa also stated that easing lockdown measures “does not free us from the civic duty to maintain as much social distancing as possible.”

“We are all aware that until there is a vaccine available on the market (…) we must carry on living with COVID-19,” Costa said. “As long as there is COVID, our lives cannot be normal.”

If the outbreak does not spike after this initial loosening of restrictions, the next phase is set to kick in on May 18 and will allow for the reopening of bigger stores, restaurants, museums, and coffee shops – albeit at reduced capacity. This is the date when schools, including childcare centres and high schools, also hope to restart operations.

The Secret to Success

Portugal has escaped the worst of the coronavirus pandemic, with approximately 25,000 confirmed cases and fewer than 1,000 dead as of April 30. This is a stark contrast from Spain and its record of 24,000 fatalities from Covid-19, though many believe that the real numbers are likely much higher.

The first case of infection wasn’t detected until March 2, much later than in neighbouring states, giving Portugal the opportunity to monitor the situation and learn from their neighbours. A state of emergency was then declared relatively rapidly, on March 19, after 112 cases were detected. In comparison, Spain declared a state of emergency after 6,000 cases were confirmed – and the delay paid a terrible interest. By moving quickly, Portugal successfully nipped virus transmission in the bud, saving thousands of lives.

The country is relatively more isolated than other European nations and its population is less dense, limiting routes through which the virus could enter the country, as well as reducing transmission within its borders. Outbreaks have been mostly limited to the cities of Porto and Lisbon, where 90 per cent of cases were identified.

António Sales, the Secretary of State for Health, told the Guardian, “The Portuguese response to the global coronavirus outbreak has, since the very beginning, been based on the best scientific advice and on other countries’ experience. It has been regularly reassessed and adapted to a very fast evolution. The country has been preparing for the worst-case scenario.”

The government also moved quickly to increase lab capacity and ventilator ability, and boost the number of intensive care unit beds – in addition to sustained investment in the country’s healthcare system over the past five years. “Between December 2015 and December 2019, the national health workforce has increased by 13 per cent, which means that more 15,000 healthcare workers, including 3,700 doctors and 6,600 nurses, are working,” Sales said. “Also, between 2015 and 2019, government expenditure on health has increased by 18 per cent (1.6 billion euros).” In contrast, health care workers in Spain have complained that their government’s lack of investment in health services hampered their ability to respond quickly to the Covid-19 pandemic.

Meanwhile, Portugal’s general tenor on politics is less polarised, especially when compared to the political fragmentation in neighbouring Spain. Because the minority socialist government hasn’t combatted the opposition, and the latter has been cooperating with the government, there has been limited friction in addressing the crisis in a straightforward manner. “Political parties have adopted a responsible behaviour because everybody understood very well the importance of being united to tackle an unexpected pandemic with dramatic consequences,” stated Sales.

The Quest for Economic Stability

Like many countries around the world, Portugal’s economy has plummeted. The International Monetary Fund predicts that Portugal’s GDP will contract by 8 per cent this year. Approximately 1 in every 5 workers have been laid off; unemployment has skyrocketed to 380,832 individuals and is expected to continue to rise. Though staggering, this number is still 10,000 below the country’s peak unemployment recorded during the sovereign debt crisis in 2008.

The tourism sector has taken an especially hard hit. Normally, tourism accounts for more than 19 per cent of Portugal’s GDP and was one of the driving factors behind its recovery after the crisis. The usually packed southern Algarve region, now deserted due to the pandemic, recorded regional unemployment rates at 41 per cent. According to Labour Minister Ana Mendes Godhino, most companies have applied for the government short-term work subsidy scheme, which allows them to suspend jobs and reduce working hours for staff without letting workers go. “We are trying to ensure that even during a very difficult period in which companies are out of business, jobs are maintained,” Godinho said. One million people have been temporarily laid off under the scheme, she added.

According to the Association of Portuguese Hotels (AHP), the tourism industry is expected to lose about 1.4 billion euros of revenue between March and June as a result of the global lockdowns and travel bans that were instituted to contain the virus’ spread. The President of the AHP, Raul Martins, said that he expects most hotels to reopen in July. Some may even open as early as June, but only if they are able to obtain a special sanitary guarantee certifying that they are coronavirus-free establishments.

Portugal is offering vouchers to tourists forced to cancel their holiday plans due to the pandemic. The “don’t cancel, postpone” voucher programme will allow travellers to reschedule their vacation until the end of 2021, and make them eligible for a refund in 2022 if postponement is not possible – or if they lose their jobs – during that time frame. The voucher applies to bookings made through accredited travel agencies, hotels, or Airbnb accommodations that were initially booked for anytime between March 13 and September 30, 2020.

According to the Secretary of State for Tourism Rita Marques, “We are being absolute pioneers in the European context. Our priority is to safeguard consumer rights and the interests of economic operators, according to the principle of ‘don’t cancel, postpone’.” To support the struggling sector, last month the Portuguese government launched a fund of 1.7 billion euros to get businesses through the crisis.

The government has announced additional measures worth 25 million euros to support Portugal’s tech and start-up sector after weeks of talks with the pop-up movement #tech4covid19, which represents founders, accelerators and investors. Credit-lines have also been established for especially hard-hit industries, like textiles, tourism, and agriculture. “Our predictions point to a recovery around Easter of next year, and even then, it will be slow,” said Eliderico Viegas, President of Algarve’s AHETA hotel association. “Loans that have to be paid back, with interest rates higher than what we faced before the crisis, are just not enough,” Viegas added.

Portugal is banking on its record as a safe haven to attract foreign investment and tourism once lockdowns are lifted to help boost a rapid recovery. Economy Minister Pedro Siza Vieira said in a telephone interview that, “Any recovery, when we have such a drastic containment, is going to be sharp. We expect a recession this year, and a recovery in the second half of the year, with a pick-up in pace next year.”

Portugal has thus far seen no slowdown in foreign investment, however, which is a very strong sign of international confidence in Portugal’s economic resilience. “So far, we have not had any investment cancellations,” Siza Viera told a news conference. “On the contrary, we know that some ongoing deals took place in recent weeks.”

Looking to jump-start an environmentally friendly economic recovery, Portugal is already preparing a number of multi-billion euro projects, including a new hydrogen plant. The country will also revive a delayed solar auction in June, as well as bidding on lithium mining contracts. The solar-powered hydrogen plant is set to break ground within a year and could attract up to 5 billion euros of private investment. It could start producing “green” hydrogen by 2023. The Dutch government and utility firms like EDP-Energias de Portugal and oil group Galp Energia have already expressed interest in the project.

“The economy cannot grow along the lines of the past and our post-coronavirus vision is to create wealth from projects that reduce carbon emissions and promote energy transition and sustainable mobility,” said Environment Minister Joao Matos Fernandes.

Tags: Portugal, energy, green energy, carbon emissions, hydrogen, economy, revival, Covid-19, coronavirus, pandemic, lockdown, tourism, environment, Antonio Costa, Joao Matos Fernandes, Ana Mendes Godhino, EDP-Energias de Portugal, Galp Energia, Pedro Siza Vieira, hospitality