Macroeconomic Picture

Between 2015 and 2019, the Portuguese economy flourished, driven by robust export performance, particularly in the tourism sector and increased household consumption. This period of economic expansion was marked by a significant reduction in the unemployment rate, which fell from an all-time high of over 17% in early 2013 to 6.5% by 2019.

However, the onset of the Covid-19 pandemic in March 2020 precipitated an economic downturn. The GDP contracted sharply by 8.2% in 2020, reflecting the profound impact of the pandemic on global and domestic economic activities. The high dependency on foreign tourism exacerbated the economic challenges faced by Portugal during this period.

Despite these setbacks, the Portuguese economy demonstrated remarkable resilience. In 2021, the GDP rebounded with a growth rate of 5.56%, followed by an even stronger growth of 6.99% in 2022. This recovery was underpinned by the revitalization of the tourism sector, increased household consumption, and continued investment in key sectors. However, 2022 also witnessed a significant rise in inflation, primarily driven by geopolitical tensions arising from the Russia-Ukraine conflict. The conflict led to increased energy and food prices, contributing to the inflationary pressures experienced during the year.

The years of 2023 and 2024 saw a continuation of this recovery trend, albeit at a more moderate pace. In 2023, the GDP growth rate was recorded at 2.53%, reflecting a stabilization of economic activities. The unemployment rate remained relatively stable at 6.6%, aligning with the Eurozone average. Inflation, which had peaked at 7.8% in 2022, began to ease, settling at 4.3% in 2023.

In 2024, the economic growth rate moderated further to 1.9%. The unemployment rate remained stable at 6.5%, while inflation continued its downward trend, reaching 2.4%. These figures indicate a period of economic stabilization, characterized by steady growth and controlled inflation.

Looking ahead to 2025 and beyond, the Portuguese economy is expected to maintain a moderate growth trajectory. The GDP growth rate for 2025 is forecasted at 2.4%, with a slight decrease to 1.9% in 2026. Private consumption is projected to grow at a steady pace, contributing to overall economic stability. Inflation is expected to stabilize around 2.0% , reflecting the effectiveness of monetary policies in controlling price levels. The unemployment rate is anticipated to remain relatively stable, hovering around 6.5%. These results contrast with a slugish economic situation all throughout Europe, which positions Portugal as an outperformer.