Portugal: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Portugal

Portugal achieved a remarkable recovery from the successive shocks that hit the global economy since the pandemic. Growth exceeded the euro area (EA) average. Inflation decelerated fast. The fiscal position improved substantially, achieving a large surplus in 2023 and an impressive public debt reduction by 36 percentage points of GDP since 2020 to 99 percent of GDP. The external position strengthened, buoyed by vigorous exports including tourism, EU funds, and, more recently, better terms of trade. Financial stability indicators improved, reflecting a reduction in systemic risks. At this juncture, a soft landing is within reach. However, subdued productivity growth, population aging, and low investment remain key constraints to higher medium-term growth and better living standards.