IMF Staff Country Reports

The 2024 Article IV Consultation highlights that Portugal recovered strongly from the successive shocks that hit the global economy since the pandemic. Growth in 2023 continued to exceed the euro area average, driven by strong private consumption, net exports, and investment supported by EU funds. Increasing labor force participation and net positive migration led to higher hours worked while unemployment remains at historically low levels. Inflation has decelerated fast. A large fiscal surplus was achieved in 2023, and public debt was reduced to 99 percent of gross domestic product (GDP)—a remarkable 36 percentage points of GDP since 2020. The external position strengthened, supported by vigorous exports including tourism, EU funds, and improved terms of trade. Financial stability indicators improved, reflecting a reduction in systemic risks. Growth is projected to remain robust in the near term, and inflation is projected to decelerate further. However, low productivity growth, population aging, and subdued investment remain constraints to higher growth and better living standards over the medium term.