Portugal was handed a score of 97 out of 100, beating the likes of the United Kingdom and the United States by some margin.
The list, which is topped by Sweden, Finland and Norway, reveals that Portugal fares excellently in most areas, with its ranking only negatively affected by corruption issues still facing the country.
At the bottom of the list comes Syria, ahead of South Sudan and Eritrea.
In Europe, reverberations from the refugee crisis continued to fuel the rise of xenophobic, far-right parties, which gained ground in elections in France, Germany, the Netherlands, and Austria.
The latest report added that democracy faced its most serious crisis in decades in 2017, as its basic tenets, including guarantees of free and fair elections, the rights of minorities, freedom of the press, and the rule of law, came under attack around the world.
Seventy-one countries suffered net declines in political rights and civil liberties, with only 35 registering gains. This marked the 12th consecutive year of decline in global freedom.
The United States retreated from its traditional role as both a champion and an exemplar of democracy amid an accelerating decline in American political rights and civil liberties.