Portugal’s economy is set to outpace most of Europe next year, following an upgraded forecast from the Bank of Portugal, which now expects GDP to grow by 1.9% in 2025, up from 1.6% projected in June.
The improved outlook is driven by stronger household spending and a more positive economic performance anticipated in the latter half of the year, reflecting renewed confidence in Portugal’s growth trajectory.
According to the central bank, the revision was underpinned by fresh national accounts data indicating “higher projected growth for the second half of the year.”
Private consumption — which typically makes up over 60% of national output — is forecast to expand by 3.3% in 2025, compared with 3% this year. The increase is being fuelled by rising wages, tax cuts on labour income and pensions, and an overall boost to disposable household income.
When viewed against the wider European backdrop, Portugal’s performance stands out. The EU’s average GDP growth is expected to reach just 1.1% in 2025 and 1.5% in 2026, leaving Portugal well ahead of the bloc’s pace.
For the years ahead, the Bank of Portugal has maintained its forecasts at 2.2% for 2026 and 1.7% for 2027, signalling steady and above-average expansion.
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Paul Stannard, Chairman and Founder of Portugal Pathways and the Portugal Investment Owners Club, said:
“With private consumption accelerating, greater purchasing power in households, and the efficient deployment of EU recovery funds, Portugal is continuing to deliver above-average growth in the EU.
“That’s making the country ever more attractive to foreign direct investment — investors want to be where the potential upside is clear.”
Portugal’s fiscal and structural position also remains encouraging. The European Commission expects the debt-to-GDP ratio to fall from 94.9% in 2024 to 91.7% in 2025 and 89.7% in 2026, highlighting continued fiscal prudence.
The ongoing rollout of the Recovery and Resilience Plan (RRP), financed through the EU’s Next Generation initiative, is set to further stimulate investment and consumption — particularly across infrastructure, digital transformation, and the green transition.
Tourism, a cornerstone of the Portuguese economy, continues to thrive. International visitor spending is forecast to reach €33.1 billion in 2025, while domestic tourism is expected to generate €22.9 billion, both comfortably surpassing pre-pandemic figures.
This steady inflow of tourism revenue strengthens the services sector, bolsters employment, and reinforces consumer confidence.
Portugal’s solid fundamentals have also earned recognition from credit agencies. In August, S&P Global Ratings upgraded the nation’s credit rating to A+, citing its “economic resilience” and continued progress in reducing external vulnerabilities — a clear sign of international confidence in Portugal’s economic management.
About Portugal Investment Owners Club
The Portugal Investment Owners Club, or P Club for short, is a unique investor membership community designed for discerning individuals, families, and organisations committed to exploring and capitalising on life in Portugal and enjoying money-can't-buy experiences and exclusive events.
About Portugal Pathways
Portugal Pathways has supported hundreds of Golden Visa residency-by-investment applications and provides expert guidance through its professional supply chain network on luxury property, wealth management, and tax optimisation, including post-NHR tax regime planning, as well as private healthcare, IFICI tax incentive applications, money transfers and bespoke relocation solutions to enhance life and investments in Portugal.
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