World Economy

Young Entrepreneurs Lead Portugal Out of Crisis

Young Entrepreneurs Lead Portugal Out of CrisisYoung Entrepreneurs Lead Portugal Out of Crisis

The panoramic terrace with views of the buildings in Lisbon’s Old Town glows in the evening sun. Couples snuggle on benches, a street musician plays Brazilian melodies on saxophone, the Tagus River flows down beneath and a giant Jesus statue can be seen on the other bank. Tourists and locals alike raise their mobile phones into the air as they try to snap the prettiest views. Then they stroll over to the lime-green Piaggio Ape owned by Monica Santos and Joao Reis.

The two Portuguese set up Maria Limao, a small food truck that sells homemade lemonade and crepes in Lisbon in mid-July. Originally, Monica Santos, 33, had previously been employed as a social worker, but she lost her job during the debt crisis. The same happened to her friend Reis, 38, who studied math and marketing at college. Neither wanted to leave the country the way so many others from their generation did. And they didn’t want to give up, sit back and take things easy and move back in with their parents, NewsNow reported.

When they learned that Lisbon’s city government was permitting people to set up businesses using Asian-style Tuk-Tuks, they borrowed €30,000 ($33,873) from their families and the bank and purchased a Piaggio Ape and the kitchen equipment they needed to run their business. Santos had always enjoyed cooking, and now she finds herself spending 10 hours a day on her feet, taking turns with Reis at the crepe griddle and the juicer. They prepare the ingredients the evening before.

Santos and Reis have already recouped half of their investment. With things going so well, Reis is also considering setting up a second food truck on the beach in his hometown in the Algarve region, where he used to wait on tourists as a boy in his parents’ own restaurant. He says he’d like to employ jobless friends there.

After all, they’re not the only ones to have lost jobs. When the country had to turn to the European Union for a bailout in 2011, Portugal was forced to implement harsh austerity measures. Some 485,000 Portuguese, particularly young university graduates, left the country during the crisis to try and find opportunities abroad. They went to Germany, Brazil and even to the former African colony of Angola.

 New Spirit

Around 60% quickly returned. Others never left the country, with many of them trying to find a way to eke out a living after finding themselves unemployed. They took risks and established their own businesses, reinventing traditional products, opening hotels with new twists and unusual restaurants. They developed software and became fashion designers. In doing so, they also transformed Lisbon into one of Europe’s most popular travel destinations while at the same time creating an unexpected economic upswing and helping to bring an end to the country’s blues.

The transformation is particularly apparent in Lisbon, but also in many other places. You see it in the Embaixada, an 18th century palace that has been converted into a chic shopping center in Lisbon’s historic quarter. It’s a collective concept store and serves as a sort of embassy for the best products made in Portugal.

The general mood in Lisbon ahead of Sunday’s parliamentary elections in Portugal was a cheerful one. The unemployment rate has fallen from 17% in 2012 to 12%. The government’s tax revenues are strong and almost twice as much has been raised through privatization than agreed to with the country’s lenders. Last year, Portugal was able to end its aid program and successfully raise its own money on the markets. Since then, the economy has grown steadily, with 1.6% growth this year–a figure that is higher than the eurozone average. It’s even possible the country will achieve its deficit goal of 3% of gross domestic product.

 New Energy

It’s useful data for the current coalition government–comprised of the conservative Social Democrats and the center-right, business-friendly People’s Party–because its leaders can point out that, after four difficult years, it has successfully led Portugal out of the crisis. Of course, it wasn’t easy: The government raised taxes significantly, it liberalized the labor market, laid off civil servants, reduced salaries for public workers as well as pensions and social services.

But that’s only the economic side of the Portuguese miracle. The crisis also unleashed a new energy in the Portuguese–it swept away old structures and also opened the door for a new spirit in the country. The city government in Lisbon played an important role, too. Five years ago, the capital city began providing support to young entrepreneurs, creating a network of contacts, providing access to investors, largely abroad.

The city founded the Start-up Lisboa incubator, which has yielded more than 250 entrepreneurs and created 800 new jobs. The city also helped to make office space available, with software developers and programmers now working in three renovated buildings the historical city center. Those working in tourism, trade and fashion are centered around the magnificent boulevard Avenida da Liberdade.

There are reasons behind the success story. People are well-educated in Lisbon, and salaries are lower than in other European metropolitan areas, as are living costs.

A year and a half ago, Filipa Neto established the start-up Chic by Choice, a company that offers luxury clothing for rent online. She obtained a half a million euros in venture capital to launch the company, no small responsibility for a young woman.

From its office in Lisbon that was provided by the city, the staff of Chic by Choice purchases and sends Haute Couture all across Europe.

The company is so successful that Neto aims to hire two new people each month. And that’s not all, she says with a smile: In August, she acquired a German competitor