Portugal Economic Outlook
Tourism and services-driven economy:
Portugal’s economy is largely driven by tourism, which contributes around 15% of GDP. The country’s historic cities, scenic coastline, and favorable climate attract millions of visitors annually. Beyond tourism, Portugal has a strong services sector, particularly in finance, real estate, and business outsourcing.
Manufacturing and exports:While services dominate, Portugal maintains a robust export sector, with industries such as textiles, footwear, automotive parts, and cork production. The country has also gained prominence in renewable energy, particularly wind and solar power, with ambitious targets for carbon neutrality. However, Portugal remains heavily dependent on European markets, making it vulnerable to external economic conditions.
Economic challenges:Portugal faces structural issues such as high public debt, slow productivity growth, and an aging population. Wages remain relatively low compared to other Western European countries, leading to talent outflows, particularly among young professionals. Despite improvements in public finances, government spending remains constrained due to past debt burdens from the Eurozone crisis.
Portugal’s economic outlook:Growth in Portugal’s economy is expected to remain steady, supported by tourism, renewable energy investments, and digital services expansion. However, addressing long-term challenges such as labor market reforms, infrastructure modernization, and education investment will be crucial to sustaining economic progress. The country’s ability to attract foreign investment and innovate in new industries will be key to its long-term prosperity.
Portugal's Macroeconomic Analysis:
Nominal GDP of USD 289 billion in 2023.
Nominal GDP of USD 309 billion in 2024.
GDP per capita of USD 29,871 compared to the global average of USD 10,589.
GDP per capita of USD 28,018 compared to the global average of USD 10,589.
Average real GDP growth of 2% over the last decade.
Average real GDP growth of 2% over the last decade.
Sector Analysis
In 2022, services accounted for 67.0% of overall GDP, manufacturing 11.9%, other industrial activity 19.1%, and agriculture 2.0%. Looking at GDP by expenditure, private consumption accounted for 62.6% of GDP in 2023, government consumption 17.0%, fixed investment 19.6%, and net exports 0.8%.International trade
In 2023, manufactured products made up 74.9% of total merchandise exports, mineral fuels 6.6%, food 13.5%, ores and metals 2.6% and agricultural raw materials 2.1%, with other categories accounting for 0.3% of the total. In the same period, manufactured products made up 68.7% of total merchandise imports, mineral fuels 11.6%, food 15.2%, ores and metals 2.7% and agricultural raw materials 1.7%, with other goods accounting for 0.1% of the total. Total exports were worth USD 85.70 billion in 2024, while total imports were USD 116.20 billion.Main Economic Indicators
Economic growthThe economy recorded average annual growth of 2.0% in the decade to 2024. To read more about GDP growth in Portugal, go to our dedicated page.
Fiscal policy
Portugal's fiscal deficit averaged 2.7% of GDP in the decade to 2023. Find out more on our dedicated page.
Unemployment
The unemployment rate averaged 8.7% in the decade to 2024. For more information on Portugal's unemployment click here.
Inflation
Inflation averaged 1.9% in the decade to 2024. Go to our Portugal inflation page for extra insight.
Monetary Policy
Euro Area monetary policy rate ended 2024 at 3.15%, up from 0.05% a decade earlier. See our Portugal monetary policy page for additional details.
Exchange Rate
From end-2014 to end-2024 the euro weakened by 20% vs the U.S. dollar. For more info on the euro, click here.
Economic situation in Portugal
Portugal was the Euro area’s top performer in Q4: Tax cuts, pension hikes, surging real wages and a decline in imports caused sequential GDP growth to jump. Shifting to Q1 2025, our Consensus is for the economy to have decelerated from Q4’s above-trend result, and available data backs this forecast. Industrial output and goods exports fell from Q4’s average in January, likely dented by weaker global vehicle demand. Moreover, retail sales lost momentum in January–February, and consumers remained deeply pessimistic in Q1, boding ill for private spending. In politics, Prime Minister Luis Montenegro lost a vote of no confidence in March, paving the way for the country’s second early elections in two years on 18 May. The election appears likely—as of now—to result in another fragmented Parliament with a minority government, creating political instability and stymieing policymaking.Portugal Economic Forecasts
Projections out to 2034.48 indicators covered including both annual and quarterly frequencies.
Consensus Forecasts based on a panel of 23 expert analysts.
Want to get insight on the economic outlook for Portugal in the coming years? FocusEconomics collects projections out to 2034 on 48 economic indicators for Portugal from a panel of 23 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Portugal economy. To download a sample report on the Portugal's economy, click here. To get in touch with our team for more information, fill in the form at the bottom of this page.