Banco de Portugal Data Shows Economy Lent 2.7 Percent of GDP Abroad in 2025 — Down From Three-Decade High

Portugal's economy lent a net 2.7 per cent of GDP to the rest of the world in 2025, down from 3.3 per cent the previous year — when the figure had been the highest in nearly three decades. The data, released on Thursday by the Banco de Portugal as part of its annual financial accounts report, shows that while the country remains a net creditor to the outside world, the cushion is narrowing as Portuguese companies increasingly tap foreign capital to fund investment.

Households are Portugal's biggest savers

Portuguese households were the sector with the largest financing capacity in 2025, equivalent to 3.9 per cent of GDP. They channelled surplus savings to the rest of the world (1.3 per cent of GDP) and to the domestic financial sector (1.0 per cent of GDP). Much of this went into investment fund units issued by non-resident funds (0.7 per cent of GDP), a sign that Portuguese savers continue to diversify beyond domestic markets.

Within the domestic banking system, the increase in household borrowing — equivalent to 4.1 per cent of GDP — was more than offset by growth in deposits (2.6 per cent of GDP) and investments in insurance and equity products (1.3 and 1.0 per cent of GDP, respectively).

Companies are the only sector borrowing from abroad

Non-financial corporations were the only resident sector to register a net financing need in 2025, equivalent to 3.1 per cent of GDP. The rest of the world was their principal source of capital, providing the equivalent of 2.8 per cent of GDP.

Foreign investors poured money into Portuguese corporate equity and participations (2.9 per cent of GDP) and into debt securities issued by Portuguese firms (1.3 per cent of GDP). These inflows were partially offset by Portuguese companies investing abroad in equities and participations of non-resident entities (1.3 per cent of GDP).

The financial sector exports capital

Portugal's financial sector was also a net lender to the outside world, to the tune of 5.2 per cent of GDP. Banks and insurers were heavy buyers of foreign debt securities (10.1 per cent of GDP), though this was partially balanced by a rise in deposits held by non-residents at Portuguese financial institutions (6.5 per cent of GDP). The reduction in government bond holdings by domestic banks — equivalent to 3.0 per cent of GDP — contributed to the public sector effectively financing the financial sector by 2.7 per cent of GDP.

Public finances remain in surplus

The general government sector recorded a financing capacity of 0.8 per cent of GDP, continuing a trend that has seen Portugal move from chronic public deficits to modest surpluses. The improvement reflects years of fiscal consolidation and the tailwind of lower debt-servicing costs following ECB rate cuts.

What it means

The 0.6 percentage point decline in net lending to the rest of the world is not, in itself, alarming — Portugal remains a creditor nation, a dramatic shift from the years before the 2011 bailout when the country was running current account deficits above 10 per cent of GDP. But the trend bears watching. The main driver of the narrowing is rising corporate demand for foreign capital, which could reflect either healthy investment appetite or growing competitive pressures on domestic firms at a time when the economy is expected to have contracted in the first quarter of 2026.

Separately, data released earlier this year showed that foreign direct investment in Portugal fell 34.9 per cent in 2025 to EUR 8.51 billion, with European countries — led by Luxembourg at EUR 1.1 billion — accounting for the bulk of inflows. Taken together, the figures suggest that while portfolio and debt investment continues to flow into Portuguese assets, the direct productive investment that creates jobs and transfers technology is under pressure.

Sources: Banco de Portugal (financial accounts communiqué, 10 April 2026), Lusa, Dinheiro Vivo. FDI data: Banco de Portugal via Plataforma Media.