Portugal GDP

Economic growth flatlines in the first quarter of 2026

Series of storms and Iran war cause GDP to stall in Q1: According to a flash estimate, Portugal's GDP stalled in seasonally adjusted quarter-on-quarter terms in Q1, following 0.9% growth in the prior quarter. Q1's reading was the weakest in a year and undershot the euro area’s expansion for the first time since Q1 2025. Q1’s weak print reflects the impact of a series of storms that battered the country in January and February, with reconstruction efforts also slowed by the surge of energy prices after the U.S.-Iran war broke out. On a seasonally adjusted year-on-year basis, economic output increased 2.3% in Q1, following a 1.9% expansion in the prior quarter.

Net exports fall: While precise estimates of GDP components are not yet available, the statistical office stated that net exports fell as imports recovered more than exports; the storms dealt a heavy blow to one of Portugal’s biggest industrial hubs. Meanwhile, domestic demand rebounded, with investment accelerating, likely boosted by EU funds; however, private spending slowed. A detailed release of the Q1 GDP figures will be published on 29 May.

GDP growth to remain broadly stable in 2026 vs 2025: Sequential GDP growth should gain pace through Q4 2026 as the economy gradually recovers from a series of winter storms. Meanwhile, our Consensus is for GDP to expand in 2026 roughly as fast as it did in 2025. Private consumption growth should hit a joint six-year low, capped by higher energy costs; however, exports are expected to recover after bottoming out last year as global trade uncertainty dissipates. Moreover, fixed investment should accelerate, aided by EU funds—including disbursements from the Solidarity Fund to cover the storm damage—a corporate tax cut and reconstruction efforts. The implementation of the trade deal between the U.S. and the EU and the evolution of the Middle East conflict are key to monitor.

Panelist insight: EIU analysts commented on the drivers of the Portuguese economy for this year: “The main drivers of economic activity in 2026 will be private consumption, a strong tourism sector and an uptick in gross fixed investment, which will seek to capture the last year of EU disbursements from the RRF. Exports will increase slightly in 2026 […], but their growth will be outpaced by imports, as the country has historically run a trade deficit. Strong growth in Spain will also help Portugal's trade balance and offset the expected drop in external demand due to import tariffs in the US. Portugal's tourism sector will continue its strong performance, albeit with a lower impact on the economy than in the immediate post-pandemic years. However, it will still reach new records and help to keep the current account in surplus. Following the war in Iran, it is likely that Portugal will benefit from more arrivals as tourists divert their holiday destinations away from areas close to the conflict like Turkey, Cyprus and the Gulf states.“

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Portuguese GDP projections for the next ten years from a panel of 27 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. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable GDP forecast available for Portuguese GDP.

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