Portugal's economy expanded by 2.5% in the second quarter of 2026 against the same period last year, twice the growth rate recorded across the Eurozone. The figure has led to an upward revision of the country's full-year GDP forecast, now standing at 2.3%.
According to the third edition of the Macroeconomic Report for Portugal, compiled by BFF Banking Group in partnership with Nova SBE, GDP grew by 0.8% quarter on quarter between April and June. This placed Portugal ahead of Germany, France, Italy and Spain over the same period.
The strength of the economy has fed through into employment. Unemployment fell to 5.3%, the lowest rate recorded since the current methodology was introduced in 2011, while the number of people in work climbed to a record 5.4 million.
"Portugal's growth story continues to outperform its European peers, but the numbers behind the headline figure deserve just as much attention as the figure itself." said Paul Stannard, chairman and founder of Portugal Pathways and the Portugal Investment Owners Club.
The report also points to mounting pressures beneath the positive headline figures. Labour shortages in construction, healthcare and technology pushed labour costs up by 5.4%, rising to 7.1% within construction, a rate that has outstripped gains in productivity per worker.
Core inflation rose to 2.7% in August, a result of higher international energy costs tied to disruption in the Strait of Hormuz. Investment showed signs of slowing over the same period, with Gross Fixed Capital Formation down by 1.9% quarter on quarter and the value of public works tenders falling by 39% in the first six months of the year.
The pace of future investment will depend heavily on the deployment of European funding, including Portugal 2030 and the PTRR programme, worth €22.6 billion through to 2034, following the financial closure of the PRR on 31 August.
The property sector continued to strengthen, with housing credit rising by 11% year on year in July. The public guarantee scheme for young buyers accounted for 32.9% of all lending issued during the quarter.
Portugal's public finances remain on a stronger footing than the European average, with the public debt ratio forecast to fall to 85.7% of GDP in 2026 and 82.5% in 2027. Demand for Portuguese government bonds has held firm, with 10-year yields at 3.67% at the end of August, and the country continues to receive favourable ratings from S&P, Fitch and DBRS.
About Portugal Investment Owners Club
The Portugal Investment Owners Club, or PIO 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 estate planning, wealth management, Golden Visa and tax optimisation, including post-NHR / IFICI tax regime planning, as well as private healthcare, money transfers and bespoke relocation and luxury real estate solutions to enhance life and investment in Portugal
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