The Algarve region is located in the south of Portugal, bordered on the north by the Alentejo region, on the east by the Spanish region of Andalusia, and on the southern and western areas by the Atlantic Ocean. The region is spread over 5,000 km 2 and is home to about 440,000 inhabitants, which accounts for 4.3% of the Portuguese population.
Taking into account the population dynamics, the region is characterised by a rather low population density (88 inh/km 2), which is below the national average and among the regions with lowest regional population density in Portugal.
The regional GDP per capita expressed in purchasing power standards (PPS) has decreased in the last few years but is still the second highest amongst the Portuguese regions, reaching 78.7% of the EU28 average (2014).
Due to the fact the regional GDP per inhabitant is now between 75% and 90% of the EU28 GDP per inhabitant average, the region is now considered as a transition region.
This means that the co-financing rate of European funds to support projects participated by Algarve´s regional actors is smaller comparing to other Portuguese regions.
The unemployment rate has decreased significantly since 2011 (at that time was around 17.5%, which was the highest in the country). In the third quarter of 2015, Algarve’s unemployment rate was 10.2%, the second lowest rate among all the Portuguese regions (national rate was 11.9% in the same period).
Recognised world-wide as a holiday destination, Algarve is one of the main tourism areas of the country. The regional economy is mainly based in three key sectors: tourism (accommodation and catering), retail and wholesale, and construction. These sectors are Algarve's central economic activities, considering both the people employed and the income generated. However, the economic activity is not limited to these sectors as industry, agriculture and fisheries are also relevant, although loosing relative importance in the regional economy. In contrast, the economic activities that have gradually been increasing importance are real estate, agro-food and biotechnology.
The regional economic activities are strongly based in the tertiary sector. All in all, 87% of the regional gross value added (GVA) comes from the tertiary sector, 9.8% from the secondary sector (including construction), and 3.2% from the primary sector.