Portugal: 2026 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Portugal

Portugal’s economy continued its strong performance in 2025. GDP grew faster than the euro area average. The budget recorded its third surplus in three years, bringing public debt below 90 percent of GDP, down from 134 percent in 2020. Employment remained strong. Inflation declined close to target. Strong tourism inflows kept the current account in surplus despite lower external demand. Systemic financial risks remained moderate. Yet, structural challenges persist: living standards are well below EU average, public debt is still high, and fast-rising housing prices weigh heavily on households. The baseline outlook is favorable, but significant risks, notably from the war in the Middle East, could lower growth or reignite inflation.