Projections for this year fall below the government’s estimate, which was initially set at 2.1% in the State Budget for 2025 and later revised to 2.4% in the report submitted to Brussels in April.
The Fiscal Council (CFP), in its report released today, asserts that “growth in 2025 should be driven by consumption and investment,” with private consumption projected to benefit from the anticipated impact of economic policy (and administrative) measures of a temporary nature, such as the extraordinary pension supplement and the adjustment of withholding tax tables for IRS.
The CFP’s GDP forecasts, based on invariant policies and included in the report “Economic and Budgetary Perspectives 2025-2029 (update),” compare with April’s growth estimates of 2.2% for this year and 2% for the next.
This downward revision “is due to lower public investment rates throughout the horizon, as well as a lower export share in GDP,” explains the CFP.
Regarding exports, this might be the first year post-pandemic with export growth falling below the external demand directed at the Portuguese economy, according to the document.
For 2027, the organization led by Nazaré da Costa Cabral predicts a more significant slowdown to 1.6%, due to the end of the investment cycle associated with the Recovery and Resilience Plan (PRR).
As for inflation, the CFP projects a gradual reduction, with the harmonized rate slowing to 2.3% in 2025, following the 2.7% recorded in 2024, converging to 2% in the medium term.
The independent entity also warns that the macroeconomic scenario “continues to be marked by a framework of high uncertainty, with risks predominantly weighing down on economic activity while remaining globally balanced for inflation.”
These projections are made under an invariant policy scenario, meaning they only consider measures in force or announced with sufficient detail. They already include new measures compared to April’s publication, such as the reduction of IRS rates in 2025 and the new extraordinary pension supplement.
The CFP also took into account the information contained in the invariant policy framework recently sent to the Assembly of the Republic, to be considered in the preparation of POE/2026.
