Portuguese economy grew by 1.9% in 2025, falling short of the Government’s forecasts
This is the third consecutive year of slowdown, with exports penalising the performance of the national economy, following the temporary shutdown of Galp's refinery in Sines.
The Portuguese economy grew by 1.9% in 2025, below the 2.1% growth in 2024 and below the 2% forecast by the Government and the Bank of Portugal. It was the third consecutive year of slowdown in national economic growth, with exports penalising the economy’s performance, following the temporary shutdown of Galp’s refinery in Sines. According to the flash estimate released on Friday by the Portuguese National Statistics Institute (INE), growth in the fourth quarter was 1.9%, after 2.3% in the previous quarter.
“For 2025 as a whole, GDP grew by 1.9% in volume, after an increase of 2.1% in 2024”, writes INE. Domestic demand made a positive contribution to this variation, exceeding that observed in the previous year, reflecting the acceleration in private consumption and investment. Exports made a more negative contribution, given the pronounced slowdown.
However, “the contribution of changes in inventories became positive, while gross fixed capital formation slowed”, the same note adds. The slowdown in investment runs counter to expectations, given the need to implement the Recovery and Resilience Plan (PRR).
“The contribution of net external demand was more negative in 2025, with exports of goods and services in volume slowing more sharply than imports of goods and services”, writes INE, noting that there was “a sharp slowdown in imports of goods and services and a reduction in exports of goods and services”. It should be noted that “these developments were determined by the goods component, reflecting, to a large extent, the decrease in transactions of petroleum products”, it adds.
It should be recalled that Galp had planned a 50-day shutdown at the end of the year to carry out maintenance on the Sines refinery. The announcement was made in March by the refinery’s director.
In quarterly terms, GDP, in volume, recorded a year-on-year change of 1.9% in the last three months of 2025, after growing by 2.3% in the previous quarter. In this quarterly comparison, the negative contribution of exports was “less pronounced”, but there was still “a marked slowdown in imports of goods and services and a reduction in exports of goods and services”.
On the other hand, the positive contribution of domestic demand to the year-on-year change in GDP decreased, with a slowdown in private consumption and investment. This comparison is negatively impacted by the fact that, at the end of 2024, private consumption was boosted by the additional change in income tax brackets and the extraordinary pension supplement. In 2025, pensioners were able to enjoy the bonus in September, i.e. in the third quarter, which recorded a year-on-year increase of 2.3%.
In chain terms, i.e. compared to the third quarter of 2025, GDP increased by 0.8% in volume, after growing by 0.7% in the previous three quarters. “The contribution of net external demand to the chain variation in GDP became positive, reflecting a sharp reduction in imports of goods and services, due, to a large extent, to the aforementioned behaviour of petroleum product transactions”, INE points out. The contribution of domestic demand became negative, with a significant reduction in investment and a slowdown in private consumption.
