Portugal Economic Snapshot

Economic Forecast Summary (June 2022)

Real GDP is projected to grow by 5.4% in 2022 and 1.7% in 2023. Robust public investment, boosted by EU funds, and the return of tourism exports are set to support the recovery. Yet, the war in Ukraine, supply-chain disruptions and increases in energy and commodity prices will weigh on activity, lowering confidence and purchasing power. Although spare capacity remains, increases in energy and food prices are expected to push inflation to 6.3% in 2022 and 4% in 2023. Wages will accelerate as hours worked reach pre-pandemic levels, but not enough to protect households’ purchasing power against rising inflation.

Economic Survey of Portugal (December 2021)

As in most OECD countries, the pandemic triggered a deep recession in Portugal and put huge pressure on the healthcare system. The policy response helped to weather the shock and the recovery has gained speed, sustained by progress in vaccination. However, the crisis is likely to leave scars, with increased poverty and inequality. Ensuring an inclusive recovery will require strengthening health and labour market policies. Policy action also needs to tackle new financial and fiscal risks. A swift and effective implementation of the Recovery and Resilience Plan will help to address these challenges and ensure a durable recovery. A higher uptake of digital technologies – through better infrastructure and skills development – can boost long-term growth. Equipping the population with digital and foundational skills while promoting investment and innovation in small firms will be crucial to reap the benefits of the digital transformation, while leaving no one behind.

Executive Summary


Reform Priorities (April 2021)

Going for Growth 2021 - Portugal

The pandemic highlighted gaps in the social safety net and risks aggravating the situation for disadvantaged students and vulnerable workers. Increasing the coverage of out-of-work benefits should become the top policy priority. Strengthening efforts to provide individualised support to students at risk remains crucial, as does upskilling of large parts of the workforce, especially with digital skills.

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2021 Structural Reform Priorities

  • Labour market: Reinforce social protection for non-standard employment to reduce precariousness and poverty
  • Education and skills: Raise skills to strengthen productivity, foster the creation of higher quality jobs, and improve equity and well-being
  • Competition and regulation: Strengthen competition in non-manufacturing sectors to bolster export competitiveness and productivity
  • Insolvency: Reduce high corporate leverage to raise investment and promote job creation
  • Tax system: Reduce exemptions and special rates to enhance efficiency of the tax system and strengthen public finance sustainability


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