Portugal crowned ‘Economy of the Year’ by The Economist as foreign investment accelerates

The ranking is determined using five core metrics: inflation, inflation deviation, GDP performance, employment levels and unemployment rates.

According to the publication, “in 2025, Portugal managed to combine strong GDP growth, low inflation and a booming stock market”.

Prime Minister Luís Montenegro welcomed the recognition, stating: “It is with hope and confidence that we see Portugal receiving exceptional international recognition.

“The distinction, naming Portugal’s economy as the ‘economy of the year’, is a fitting tribute to the merit and hard work of the Portuguese people and reinforces the government’s motivation to continue on the path that has brought us this far in recent months.

“It is by reforming with courage and making the country more competitive and productive that we will continue to create jobs, increase wages and strengthen the welfare state.

“In this way, we will provide greater well-being and a better future for the Portuguese people. Let’s do this, Portugal! Let’s do this, Portuguese people!”

Tourism and steady employment gains continue to underpin Portugal’s growth, but The Economist also notes the significant contribution of affluent foreign residents who are drawn to the country’s appealing lifestyle and comparatively favourable tax environment.

A major driver of this international interest has been Portugal’s Golden Visa residency-by-investment programme. A new report from the World Digital Foundation estimates that the scheme has generated around €54 billion for the Portuguese economy.

With a minimum qualifying investment of €500,000, Golden Visa participants secure the right to live in Portugal, visa-free movement across all 29 Schengen countries, and a clear route to permanent residency and dual EU citizenship after the required residency period.

Paul Stannard, chairman and founder of Portugal Pathways and the Portugal Investment Owners Club, emphasised that Portugal’s global standing has been years in development.

He explained: “Portugal has spent the last decade proving that it can pair lifestyle with economic resilience.

“The foundations laid by sustained foreign investment - much of it originally sparked by the Golden Visa - have helped accelerate Portugal into a new phase of global competitiveness.”

Stannard notes that Portugal is now appealing not only to retirees and lifestyle movers but also to ambitious entrepreneurs and international professionals.

“What we’re seeing now is a wave of skilled professionals choosing Portugal as a base, not just because of tax benefits, but because the ecosystem is genuinely maturing,” he said.

“This recognition from The Economist is confirmation of a long-term trajectory rather than a one-year anomaly.”

To find out more about investing in Portugal’s Golden Visa, contact Portugal Pathways’ expert team today.

Portugal’s strong performance places last year’s leader, Spain, in fourth position. Ireland ranks second, followed by Israel. Smaller northern European economies, including Estonia, Finland and Slovakia, sit at the lower end of the list.

The United Kingdom ranks 27th, while the United States takes 17th place.