Economic growth rises in the fourth quarter of 2025

Second release revises Q4 GDP growth up: Portugal's GDP expanded 0.9% on a seasonally and calendar-adjusted quarter-on-quarter basis in Q4 2025, up from 0.8% reported in the flash release and following a 0.6% expansion in the prior quarter. Q4's reading was the strongest in a year and among the highest in the EU. The uptick in sequential GDP growth was fully driven by a rebound in the contribution of net external demand, spearheaded by a sharp fall in imports. In annual terms, seasonally and calendar-adjusted GDP grew 1.9% in Q4, following a 2.2% expansion in the previous quarter. This brought annual GDP growth for 2025 as a whole to 1.9%—the lowest rate in the post-pandemic era (2024: +2.2%) but still above the EU average for the fourth straight year.

Net trade lifts growth amid sluggish domestic demand: Relative to the prior quarter's data, readings worsened for private consumption (+0.9% vs +1.1% in Q3), government consumption (+0.4% vs +0.5% in Q3), fixed investment (+0.3% vs +3.9% in Q3), exports of goods and services (-0.6% vs +0.1% in Q3) and imports of goods and services (-2.9% vs +1.9% in Q3). The sharp deceleration in fixed investment stemmed from a correction in transport equipment outlays, which fell 16.9% quarter-on-quarter after posting 29.6% growth in Q3.

GDP growth over 2026 as a whole to recover after hitting post-pandemic low: Looking at Q1 2026, sequential GDP growth is expected to roughly halve from the final quarter of 2025, before broadly stabilizing through Q4 2027. In 2026 as a whole though, GDP growth should rise above its 2025 rate, supported by accelerating fixed investment and exports plus slowing import growth, with investment benefiting from Next Generation EU funds and favorable financing conditions.

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