In the quarterly economic outlook summary for the third quarter of 2025, released today, economists at the Católica-Lisbon Forecasting Lab — NECEP state that “the central point” of the GDP growth estimate for 2025 “was slightly revised upward (by 0.1 percentage points) to 1.8%, following robust growth observed in the second quarter, as well as the estimate” for the third quarter.
The economic research group from the Center for Applied Studies at Católica Lisbon School of Business & Economics indicates that the Portuguese economy is expected to have grown by 0.6% sequentially and 2.2% year-on-year in the third quarter (July to September), after growing 0.7% sequentially and 1.8% year-on-year in the second quarter.
NECEP’s projection of 1.8% comes a day after the Bank of Portugal (BdP) updated its growth forecasts for 2025, revising the projection upward from 1.6% to 1.9%, partly due to better performance in domestic consumption.
For 2026 and 2027, NECEP maintains the previous forecasts, released in July, expecting the GDP to grow by 2% next year and 2.2% the following year.
“Forecast intervals remain high due to uncertainty surrounding the evolution of the global and European economies, in a context (still) marked by the potential impact of the enormous volatility in U.S. trade policy since the beginning of the year,” they explain.
The study team notes that “geopolitical risks remain active in Ukraine and Eastern Europe, but strong mediation initiatives have emerged in the Middle East” and “despite the geopolitical and commercial tensions, the markets continue to show some normality, with confined episodes of volatility followed by strong appreciation.”
In Portugal, “attention is now focused on the presentation and discussion of the State Budget for 2026, as well as the upcoming elections,” according to the study group.
Regarding the eurozone, NECEP forecasts an economic growth rate of 1.4% in 2025, with the same value expected for 2026. For 2027, a “similarly weak outlook” is anticipated, with GDP growth at 1.5%. In the third quarter, the group of 20 countries sharing the single currency is expected to have grown by 1.4% compared to the same period last year and 0.3% sequentially, according to NECEP.
“The financial and monetary effects of the pandemic years persist in the European and North American economies,” they note. In Europe, “there will be increased spending on security and defense due to geopolitical risks, in addition to expenditures arising from demographic and environmental pressures, with especially deteriorated public finances in France,” while in the United States, the concern is with the “public deficit and debt.”
In the latest Economic Bulletin, where the Bank of Portugal revised the Portuguese GDP growth forecast upward by 0.3 percentage points, it explains that the improvement is due to “incorporation of the latest national accounts data and higher projected growth for the second half,” partly driven by increased consumption (resulting from the additional IRS reduction decided mid-year and the extraordinary supplement paid to pensioners in September).
The quarterly sheet released by NECEP is based on public data, offering forecasts for major macroeconomic aggregates and analyzing the evolution of public finances, global markets, and the economic climate.
According to information published on its website, the quarterly sheet, coordinated by economist João Borges de Assunção, is submitted to a scientific committee before release.
