Portugal experienced the most significant decline in real household income among the countries of the Organisation for Economic Co-operation and Development (OECD) in the first quarter of the year, according to data released today.
Portuguese household income fell by 4.5%, quarter-on-quarter, “mainly due to increased taxes payable, with real GDP per capita also contracting (-0.6%),” the OECD stated in the release published today.
“This increase in taxes followed a drop in the previous quarter, as a result of changes in the tax regime,” the organization noted.
In one of the months of the last quarter of 2024, specifically October, withholding tax rates on income (IRS) were particularly lower than usual because they still covered the period when the government applied the IRS reduction retroactively from the start of that year.
This effect impacted the overall taxation value of the quarter, although the withholding rates at the start of this year were lower than those applied in November and December of the previous year.
In the OECD average, household income increased by 0.1% in the first quarter of 2025, reflecting the growth of real GDP per capita. However, both indicators showed a slowdown in growth compared to the previous quarter, when they grew by 0.6% and 0.4%, respectively.
Despite the overall growth, the scenario was mixed in the OECD, with half of the 20 countries with available data showing an increase and the other half a decrease.
In the G7 (Germany, Canada, United States, France, Italy, Japan, and the United Kingdom), most countries saw an increase in real household income per capita in the first quarter, except for the United Kingdom and Germany (-1.3% and -0.4%, respectively), as inflation “eroded nominal income growth.”
Among other OECD countries, Chile recorded the highest growth in real household income per capita (3.1%), with a decline in inflation and an increase in real GDP per capita (0.5%).
MES (PCT) // CC
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