OECD Economic Surveys: Portugal 2026

Portugal's economy has been outpacing the euro area average since 2022. The unemployment rate has declined, while public debt relative to GDP fell significantly. Rising disbursements of the Recovery and Resilience Funds in 2026, continuous employment gains, and recent structural reforms are all expected to support growth. However, significant challenges lie ahead. Sustaining primary surpluses and preserving public investment are essential to maintain the debt-to-GDP ratio on a firmly declining path. This requires shifting the structure of public spending towards investment, reducing spending pressures from population ageing, and reducing inefficient tax expenditures. Strengthened vocational education and training, as well as better training support for older workers, are needed to fully mobilise the working-age population, ease labour shortages and strengthen skills. Boosting competition in services sectors and maintaining investment would raise labour productivity and support sustainable gains in living standards. More consistent pricing of carbon across the economy and broader insurance coverage for natural risks would make growth more sustainable and support adaptation to a warming climate. Improving housing affordability requires structural reforms to streamline permitting procedures and spatial planning, improve efficiency and equity of property taxes, and strengthen targeted housing support for vulnerable households.