A fresh assessment from the Organisation for Economic Co-operation and Development (OECD) suggests Portugal is standing on steadier ground than it has in years. The most severe shocks appear to have passed, but the report notes residual pressures — and many continue to shape the everyday realities of households across the country.

The report comes at a time when the global economy is once again uncertain. It says Portugal is holding up well, even if it is not exactly booming. Growth has been modest, but steady. That steadiness has helped the country avoid the deeper downturns seen in other parts of Europe — something that matters to officials in Lisbon, who have not forgotten how unstable things were a decade ago.

Recovery without drama

In recent years, Portugal’s economy has avoided the sharp highs and painful lows that once defined it. Instead, it has moved at a steadier pace. Employment has risen gradually, and unemployment has remained relatively stable. For many workers, this has meant a stronger sense of job security—even if pay increases have not come as quickly as many would like.

Economists point to the government’s careful handling of public finances as one reason for this stability. Once considered a weakness, the country’s finances have gradually improved. Public debt has been reduced, and tighter spending controls have helped maintain investor confidence—especially at a time when higher interest rates are putting pressure on governments across the euro area.

Energy transition gains momentum

One area where Portugal has moved quickly is renewable energy. The survey indicates the country’s growing use of wind and solar power, which now account for a large share of its electricity supply.

The natural landscape of Portugal is very helpful in this case. Portugal is naturally suited to generating both wind and solar power, thanks to its Atlantic coastline and abundant sunshine. The need to import energy has been reduced by the construction of solar and wind projects along the coast. This is something really beneficial during Europe’s recent energy crisis.

Renewables are not just good for the environment; they are also helping the economy. Foreign investors are showing greater interest in Portugal’s clean energy sector, encouraged by stable regulations and clear long-term government plans.

A cost-of-living reality check

For many families, the idea that the economy is “stable” doesn't match what they feel at the end of the month. The OECD points to housing as one of Portugal’s biggest pressures. The price of buying or renting a home has jumped sharply in recent years, especially in Lisbon and Porto. For people on average salaries, it has been difficult to keep up.

Tourism, foreign buyers, and the growth of short-term rentals have all added to demand in city neighbourhoods. That has brought jobs and new investment, but it has also tightened the housing market. There simply aren't enough homes for the number of people who want to live there.

The report says the government needs to respond by increasing housing supply and reducing delays that slow construction. It warns that if homes remain out of reach, public frustration will continue to grow. Protests over rising rents are already a sign of how stretched many households feel.

EU recovery funds have also helped keep the broader economy steady. Some argue the benefits have not been distributed equally, but the OECD says the funding has helped upgrade infrastructure and support businesses, giving Portugal greater protection against external economic shocks.

Productivity still lags

Another issue highlighted in the report is productivity. Although more people in Portugal are graduating from university and gaining higher qualifications, the country still produces less per worker than many of its European neighbours. This makes it harder for wages to rise and for businesses to remain competitive globally.

According to the OECD, one reason is the mismatch between skills and jobs — workers’ qualifications do not always align with employers' needs. Some industries also face challenges related to low innovation. There are encouraging signs, especially in Lisbon’s growing tech sector, where startups and digital companies are expanding rapidly.

A measured assessment

Overall, the picture is balanced. Portugal is in a stronger position than it was a decade ago and is better equipped to deal with economic shocks. Even so, it cannot fully shield itself from developments beyond its borders — whether slower growth in its export markets or rising global tensions.

Looking beyond the numbers

In the end, statistics only tell part of the story. What many people really want to know is whether steady growth will lead to better pay, affordable housing, and real opportunities for younger generations. The OECD suggests that Portugal now has the chance to move in the right direction. Whether that happens, though, will depend on the decisions made by those in power in the years ahead.