Low energy intensity of the economy and negligible trade relations with Russia mean that Portugal is less exposed to the impact in the first place.
With reduced trade flows with Russia and a relatively lower weight of energy in the budgets of families and companies, Portugal is one of the European Union (EU) countries that, at the outset, may be less exposed to the negative economic impacts of war in Ukraine, a scenario that is precisely the opposite of what happened with the pandemic.
The conclusion is from economist Nils Redeker, who, in a study published by the Jacques Delors Centre this week, analyzes, for each of the EU countries, the circumstances they face at the beginning of this conflict, namely regarding the importance of trade relations with Russia, dependence on Russian oil and gas supplies and the weight that energy consumption has in each of the economies. In all these indicators, Portugal is among the EU countries with, at the outset, less unfavorable situations for their economies.
The author begins by analyzing Russia's importance in exports and imports for each EU country. Portugal is, among the 27 countries, the third with the smallest weight of Russia in the total of its exports, only behind Malta and Greece, and the seventh with respect to imports. In both cases, the weight of Russia as Portugal's trading partner did not exceed 0.2% before the war.
At the opposite pole are countries neighboring the Russian territory, such as Latvia, Estonia, Lithuania and Finland, which have Russia as one of their main trading partners and therefore have considerably more to lose from the deterioration of economic relations between Russia and the West since the war in Ukraine began. As the author states, "the direct economic costs of trade with Russia are overall limited, but are heavily concentrated in the Baltic countries and some Eastern member states."
Then there is the problem of dependence on Russian oil and gas. So far, the EU has chosen not to include in the sanctions on Russia a blockade of its energy sales, and this is precisely because several European countries would have a lot to lose with such an option. Several Eastern European countries import more than 60 percent of their oil and natural gas from Russia. And even major European powers such as Germany and Italy, the study notes, "stand out as Member States that rely heavily on gas in their national energy consumption and, at the same time, import high percentages of their gas from Russia. Here again, Portugal is among the least exposed to this type of dependence. It is the third EU country with a smaller weight of Russia in its oil and fuel imports and is eighth when it comes to natural gas. Finally, the third factor of exposure to the crisis analyzed in the study is not related to the direct relations of each country with Russia (which in the case of Portugal are small due to its geographical location), but rather with the impact that each economy may suffer from the simple fact that the price of energy goods is skyrocketing in international markets. To this end, the author verifies, both for families and for the economy as a whole, what weight energy has in their activities. And here too, for reasons such as the climate or the relatively small weight of industry, Portugal is at the bottom of the European table. According to the author's calculations, Portugal is the seventh EU country with the lowest energy intensity (how much energy it is necessary to spend per unit of GDP). And as far as household expenditures are concerned, Portuguese spending on energy (electricity, heating and transport) represents less than 10% of the total, making it the second lowest in the EU.
Once again, among the countries most exposed to a rise in energy prices are the Eastern European countries.