The Commission now expects GDP to rise by 1.9% in 2025 and 2.2% in 2026, an upward adjustment from earlier estimates that strengthens confidence in the country’s ongoing recovery.

A major contributor to this positive trajectory is stronger domestic demand, underpinned by a resilient labour market and a range of focused fiscal initiatives.

Higher wages, revised withholding-tax brackets, and the allocation of a one-off pension bonus have all helped to increase household purchasing power.

At the same time, renewed activity in the construction sector—supported by EU recovery funding—has further reinforced economic momentum.

While export growth has fallen short of previous expectations and imports continue to outpace them, the trade deficit remains sizeable. A more noticeable narrowing is now anticipated in 2026 as global demand gradually strengthens.

On fiscal matters, Portugal continues to make headway in reducing its public debt burden. The Commission forecasts the debt-to-GDP ratio to decline from 93.6% in 2024 to 91.3% in 2025, and then to 89.2% in 2026.

These gains stem from sounder budget balances, lower borrowing needs, and consistent policy discipline.

Against the wider euro-area backdrop, Portugal is distinguishing itself as one of the more resilient performers.

While several EU economies grapple with weak demand and structural challenges, Portugal benefits from effective use of EU recovery funding—including the Recovery and Resilience Facility—together with post-pandemic reforms and a labour market that has remained notably strong.

Paul Stannard, chairman and founder of Portugal Pathways and Portugal Investment Owners Club, commented on the latest developments.

Credits: Supplied Image; Author: Client; Portugal is set to maintain its status as one of Europe's fastest-growing economies

“Portugal is entering a phase where domestic momentum is clearly taking charge, and while external headwinds remain, the country now offers a compelling mix of investment opportunity, lifestyle appeal and economic resilience”, he said.

“Portugal appears positioned for a more stable, demand-driven expansion—supported by improving fiscal metrics, rising investor confidence, and a domestic economy gaining decisive momentum.”

Recent years have also seen Portugal’s economy strengthened by the Golden Visa residency-by-investment scheme.

A new report from the World Digital Foundation (WDF) indicates that the Golden Visa has contributed an impressive €54 billion to the economy.

To learn more about investing through Portugal’s Golden Visa programme, you can arrange a free, no-obligation discovery call with Portugal Pathways today.