Portugal's Economy Slows to 0.2 Percent Growth in the Third Quarter but Still Outpaces the Euro Area Over the Year

Portugal's economy grew by just 0.2 percent in the third quarter of 2026 compared with the previous three months, down from 0.9 percent in the spring, according to the flash estimate published on Friday 30 October by the Instituto Nacional de Estatística (INE, the national statistics institute). Compared with the same quarter of 2025, gross domestic product (GDP) was 2.4 percent larger, after annual growth of 2.6 percent in the second quarter.

Why growth slowed

INE puts most of the quarterly slowdown down to trade. Net external demand made a slightly negative contribution because exports of goods and services fell more sharply than imports. Domestic demand still added to growth, but private consumption grew more slowly; investment rose again after falling in the second quarter.

On the annual comparison, the picture is the other way round. Domestic demand contributed less than before, as both investment and final consumption spending slowed, while the drag from trade eased because imports slowed more than exports.

The spring figure INE now compares against is 0.9 percent, higher than the 0.8 percent first estimated in July. The flash estimate gives only the direction of each component, not the figures; INE will publish the full quarterly national accounts for the third quarter on 30 November.

How Portugal compares with Europe

Eurostat's preliminary flash estimate, also out on Friday, shows GDP up 0.4 percent on the quarter in the euro area and 0.5 percent across the EU, so Portugal's quarterly growth was half the euro area rate. Germany and Austria also grew 0.2 percent, Spain 0.6 percent, Italy was flat and France shrank 0.1 percent.

Over the year, Portugal does better. Its 2.4 percent annual rate is well above the euro area's 1.3 percent and the third highest among the euro area countries with data, behind Ireland (3.6 percent) and Spain (2.7 percent). Eurostat's figures are based on 19 member states and will be revised on 13 November.

What it means for residents

The 2027 State Budget, now before parliament, assumes growth of 2.3 percent this year and 2.1 percent in 2027, with unemployment at 5.8 percent this year. The Banco de Portugal (Bank of Portugal) also forecasts 2.3 percent for 2026. According to Eurostat's table, annual growth has been 2.4 percent, 2.6 percent and 2.4 percent in the first three quarters of the year, each at or above the 2.3 percent forecast for 2026 as a whole.

The weaker quarter does matter for the months ahead. The central bank's October forecast counted on household spending picking up in late 2026 and early 2027, helped by the extraordinary pension supplement and the income tax (IRS) cut announced by the government on 17 September. Friday's figures show private consumption growing more slowly in the third quarter. Jobs and pay data for the quarter are not part of the flash estimate.

What happens next

• 13 November: Eurostat's second estimate for the euro area and EU.
• 24 November: final parliamentary vote on the 2027 budget, which rests on the growth forecasts above.
• 30 November: INE's detailed national accounts for the third quarter, with the size of each contribution to growth.