Portugal’s GDP Rebounds 0.8% in Q2

Portugal’s economy grew 0.8% quarter-on-quarter in Q2 2026, accelerating from a 0.1% expansion in Q1, was driven by stronger net exports and household consumption. Exports increased 2.5% in Q2, up from 1.9% in Q1, while imports slowed sharply to 1.0% from 5.9%. Household consumption growth also accelerated to 1.0% from 0.5%. In contrast, fixed investment fell 1.9%, following a 2.9% increase in the previous quarter. The recovery follows a weak first quarter, when severe storms disrupted activity in central Portugal and a surge in energy prices linked to the conflict in Iran weighed on economic activity. Year-on-year GDP growth edged up to 2.5% from 2.4% in Q1. The government expects the economy to expand 2.0% in 2026, while the Bank of Portugal forecasts 1.8% growth, following a 1.9% expansion in 2025.

Portugal's economy expanded by 0.8% in the second quarter of 2026, accelerating from an upwardly revised 0.1% growth in the previous quarter, according to preliminary estimates. The rebound was driven by a positive contribution from net exports and stronger private consumption, although investment declined. The recovery followed a weak first quarter, when severe storms disrupted activity in central Portugal, while a surge in energy prices linked to the conflict in Iran weighed on growth. On an annual basis, GDP growth edged up to 2.5% from a revised 2.4% in the previous quarter. The government expects the economy to expand by 2.0% this year, while the Bank of Portugal projects slightly slower growth of 1.8%, following 1.9% growth in 2025.

Portugal’s economy stalled in the first quarter of 2026, marking a sharp slowdown from the 0.9% growth recorded in the previous period, particularly driven by extreme weather, including Storm Kristin and heavy rainfall, which damaged infrastructure, agriculture, and buildings, particularly in the Central region, as well as the adverse effects of the Middle East conflict. The slowdown also reflected the fading impact of government measures that had boosted household income in the second half of 2025. Household consumption growth plummeted to 0.1% in Q1 2026 from 0.9%, while government spending rose by 0.3%, down from 0.4%. Net external demand weighed on GDP, as exports grew by 2.1% but imports surged at a faster pace of 5.4%. On a positive note, fixed investment increased by 1.9%, following a 1.2% gain in the previous quarter. The Bank of Portugal warned that rising inflation and tighter financing conditions are likely to constrain consumption and investment throughout 2026.