Portugal's economy expands at twice the pace of the wider Eurozone

The figure has prompted an upward revision to the full-year GDP forecast, now put at 2.3%.

The data comes from the third edition of the Macroeconomic Report for Portugal, produced by BFF Banking Group alongside Nova SBE. Quarter on quarter, GDP rose by 0.8% between April and June, outpacing Germany, France, Italy and Spain over the same period.

The labour market has moved in step with this growth. Unemployment fell to 5.3%, its lowest level since the current methodology was introduced in 2011, while the number of people in work reached 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 flags emerging strain beneath the positive topline. Labour shortages in construction, healthcare and technology have pushed labour costs up by 5.4%, rising to 7.1% in construction alone, a pace that has outstripped productivity growth per worker.

Core inflation climbed to 2.7% in August, driven by higher international energy costs linked to disruption in the Strait of Hormuz. Investment, meanwhile, shows signs of cooling. Gross Fixed Capital Formation fell by 1.9% quarter on quarter, and the value of public works tenders dropped by 39% in the first half of the year.

Much now depends on the pace at which European funding is deployed, through Portugal 2030 and the PTRR programme, worth €22.6 billion through to 2034, following the financial closure of the PRR on 31 August.

Property remains a bright spot. Housing credit rose by 11% year on year in July, with the public guarantee scheme for young buyers accounting for 32.9% of all lending issued over the quarter.

On the public finances, Portugal continues to track below the European average. The public debt ratio is forecast to fall to 85.7% of GDP in 2026 and 82.5% in 2027. Demand for Portuguese government bonds has stayed firm, with 10-year yields at 3.67% at the end of August, and the country's ratings from S&P, Fitch and DBRS remain favourable.

For those considering Portugal as a base for investment or relocation, this combination of sustained growth, falling debt and a resilient property market continues to set it apart within the Eurozone.

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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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