Shrinking smartly and sustainably in Portugal

Portugal’s small and medium-sized cities are in demographic transition. While the country’s overall population grew slightly between 2011-24, more than two-thirds of municipalities lost residents, and ageing is accelerating most sharply in smaller cities and non-coastal regions. Some border municipalities have seen population declines of over 20% in just a decade. These trends need actions to adapt and mitigate demographic change, which can also be a chance to reduce the country's territorial gaps. This paper examines how Portugal is responding to population loss and ageing in small and medium-sized cities. It explores the drivers and consequences of demographic change, from urban sprawl, housing vacancy and skills gaps to pressures on health, education and transport systems. It also highlights innovative practices such as inter-municipal health units, demand-responsive transport, investments in digital skills, and the growing potential of the silver economy. By combining analysis of demographic trends with concrete policy examples, the paper provides insights for building more age-friendly, dynamic and resilient small and medium-sized cities. Drawing on rich data, comparative evidence and practical cases, the paper offers actionable insights for building more age-friendly, dynamic and resilient small and medium-sized cities in Portugal and across OECD countries facing similar challenges of shrinkage and ageing.