“The budgetary situation is quite stable, and the debt-to-GDP ratio continues to decline. Thus, I would say that the evolution in Portugal is positive,” stated Valdis Dombrovskis in an interview with European media in Brussels.
On the day the European Commission presented its autumn economic projections, Dombrovskis expressed expectations for “Portugal to continue recording robust economic growth, with 1.9% this year and 2.2% next year.”
The European Commission has updated its forecasts for the economic growth of the eurozone and the EU, which, like the previous ones, remain marked by global uncertainty despite the commitments of the European Union and the United States toward a trade understanding that eased tensions.
The report highlights that Portugal is among the countries “least exposed” to U.S. tariffs due to “both low effective tariff rates and limited exports to the United States.”
Portugal’s economy is projected to grow by 1.9% in 2025 and 2.2% in 2026, with the European Commission revising upwards the estimate for this year and maintaining the projection for the next.|
Brussels predicts that “domestic demand should continue to drive economic growth in Portugal, despite uncertainty in global trade,” according to the autumn economic forecasts released today.
These forecasts are more pessimistic than the government’s, which included in the 2026 state budget a growth of 2% this year and 2.3% next year.
For this year, the European Commission revised upwards its May forecast from 1.8% to 1.9%, while maintaining the 2.2% prediction for 2026. For 2027, Brussels forecasts a growth of 2.1%.
The European Commission projects that Portugal will record a balanced budget this year and a deficit of 0.3% of GDP in 2026, according to the projections released today, which are more pessimistic than the government’s.
Regarding 2026, despite fiscal revenue benefiting from economic activity and labor market dynamics, measures such as the Young IRS and IRS rate reductions, salary increases, and pension bonuses will impact public finances.
The government’s state budget forecasts an excess of 0.3% this year and 0.1% in 2026, making it the most optimistic among the institutions forecasting Portugal.
These European Commission projections represent, for 2025, a downward revision compared to the 0.1% surplus predicted in May but an upward revision compared to the 0.6% deficit projected in the spring forecasts.
Brussels aligns with the majority of institutions monitoring the Portuguese economy, such as the Bank of Portugal, the Public Finance Council, and the OECD, all predicting a deficit for the next year.
For 2027, Brussels also projects a budget deficit of 0.5% of GDP.
Regarding public debt, the European Commission estimates that the ratio should continue to decrease to less than 90% of GDP by the end of the forecast horizon.
