The Portuguese economy is projected to experience a growth between 0.2% and 0.4% in the second quarter, partially recovering from the decline observed in the first quarter. This outlook was revealed in a barometer released by the Confederation of Portuguese Business (CIP) and the Higher Institute of Economics and Management (ISEG).
For the entirety of the year, the Gross Domestic Product (GDP) is expected to rise between 1.4% and 1.7%, driven by accelerating domestic demand amid significant uncertainty in Portuguese exports.
The CIP/ISEG barometer further notes that private investment is likely to increase, fueled by the execution of the Recovery and Resilience Plan funds, paralleling trends already seen in public investment.
With a fund execution rate of 51.3% at the end of May, the report from the two institutions indicates that full utilization by the end of August 2026 “will require maintaining the execution pace observed in the early months of the year,” with the plan approved for Portugal representing around 8.3% of the annual GDP.
Private consumption is also expected to recover, aided by lower financing costs and a more resilient labor market.
Risks include the impact of U.S. trade policies and the geopolitical instability in the Middle East due to the escalation of conflict between Israel and Iran, the latter possessing the world’s second-largest natural gas reserves and third-largest oil reserves.
Quoted in a statement accompanying the barometer, CIP’s Director-General, Rafael Alves Rocha, emphasized the necessity of boosting investment, arguing that growth solely driven by consumer dynamism is unsustainable. He advocated for an acceleration of the Recovery and Resilience Plan and Portugal 2030.
