Portugal’s Economy Accelerates in Q4 Despite Weak Domestic Demand

Portugal’s economy expanded 0.8% quarter-on-quarter in Q4 2025, accelerating from a downwardly revised 0.7% in the previous quarter and surpassing market expectations of 0.5%, according to a preliminary estimate. This marked the strongest quarterly pace in a year, supported by net external demand, amid a sharp decline in imports of goods and services, particularly crude oil. By contrast, domestic demand weighed on growth, reflecting a slump in investment and slower household consumption growth. On an annual basis, the economy grew 1.9% in Q4, down from 2.3% in Q3. For the full year 2025, Portuguese GDP expanded 1.9%, slightly below 2.1% in 2024.

The Portuguese economy grew by 0.8% in the third quarter of 2025, its strongest performance in three quarters, after a 0.7% expansion in Q2 and in line with the preliminary estimate. Domestic demand rose by 1.4%, the fastest pace in a year, up from 0.9% in the previous quarter, supported by stronger private consumption and investment. The contribution of net external demand became more negative (from -0.3 p.p. to -0.6 p.p.), as exports rebounded (0.8% vs. -0.1%) but were outpaced by a sharper rise in imports (2% vs. 0.5%). On a year-on-year basis, GDP increased 2.4%, also the strongest in three quarters, after a 1.8% rise in Q2. The negative contribution of net external demand was less pronounced, reflecting a slowdown in imports (3.7% vs. 4.6%) alongside a recovery in exports (1.2% vs. -0.1%). Meanwhile, the positive contribution of domestic demand eased, driven by weaker investment growth.

The Portuguese economy expanded by 0.8% quarter-on-quarter in Q3 2025, following an upwardly revised 0.7% growth in Q2, according to preliminary estimates. This marked the fastest pace of expansion this year, supported by robust domestic demand, with household consumption accelerating. However, the contribution from net trade weakened, as imports rose more than exports. On an annual basis, GDP growth picked up to 2.4% in Q3, up from 1.8% in the previous quarter. The government estimates that the economy will grow 2% this year.