Economic Performance and Progress
-
Strong Growth and Fiscal Discipline: In 2025, Portugal’s economy maintained a strong performance, with GDP growing faster than the euro area average.
-
Debt Reduction: The budget recorded its third consecutive surplus in three years, successfully driving public debt below 90% of GDP (a significant decline from 134% in 2020).
-
Labour Market and Inflation: The employment market remained robust, while inflation successfully declined close to its target.
-
External Accounts: Strong tourism inflows ensured the current account stayed in a surplus, effectively offsetting lower external demand.
-
Financial Stability: Systemic financial risks in the country remained moderate.
Ongoing Structural Challenges
Despite the favorable momentum, several structural hurdles persist:
-
Living Standards: Living standards in Portugal remain well below the EU average.
-
Public Debt: While declining, the public debt burden is still considered high.
-
Housing Market: Fast-rising housing prices continue to weigh heavily on Portuguese households.
Outlook and Risks
While the baseline economic outlook remains favorable, significant international risks — notably stemming from the war in the Middle East — could lower overall growth or reignite inflationary pressures.
Read more here.
