The economy of Portugal is ranked 37th in the World Competitiveness Ranking 2025 by Swiss institute IMD. The large majority of the international trade is done within the European Union (EU), whose countries received 71.4% of the Portuguese exports and were the origin of 74.6% of the Portuguese imports in 2020.
The Portuguese currency is the euro (€) and the country has been a part of the Eurozone since its inception. Portugal's central bank is the Banco de Portugal, which forms part of the European System of Central Banks, and the major stock exchange is the Euronext Lisbon. Among OECD nations, Portugal has a social security system; social expenditure stood at roughly 24.6% of GDP.
The Portuguese economy had a GDP growth in 2025 of 1.9%, according to official data. The economic growth has been accompanied by a continuous fall in the unemployment rate (6% during 2025, compared with 13.9% registered in the end of 2014), with Portugal's unemployment rate remaining steady at 5.7% by July 2026, according to Statistics Portugal. Portugal registered a budget surplus of 0.7% of Gross Domestic Product (GDP) for the year 2025, reaching 2 billion euros, with public debt decreasing to 89.2% of GDP.
These rates mark an inversion from the negative trends caused by the impact of the 2008 financial crisis in the Portuguese economy that caused it to shrink for three consecutive years (2011, 2012, and 2013), accompanied by a high increase of the unemployment rate (that achieved a record of 17.7% in early 2013). The crisis had caused a wide range of domestic problems due to the levels of public deficit, as well as the excessive debt levels. The problems culminated in the confirmation from Portugal of a €78 billion financial bailout from the EU in April 2011, following similar decisions from Greece and the Republic of Ireland. The government that took office in June 2011 had to face tough choices in regard to its attempts to stimulate the economy while at the same time seeking to maintain its public deficit around the EU average.
Education in Portugal has been in gradual modernization and relative expansion since the 1960s, achieving recognition for its world-standard practices and trends in the 21st century. According to the Programme for International Student Assessment (PISA) 2015, the average Portuguese 15-year-old student, when rated in terms of reading literacy, mathematics and science knowledge, is placed significantly above the OECD's average. Portugal is home to several world class universities and business schools that have been contributing to the creation of a number of internationally recognized managers and are attracting an increasing number of foreign students. Portugal's emigration rate is high compared with the EU average. Around 1.8 million Portuguese people lived outside the country by 2024, mainly in Europe and America.
History
Portuguese Colonial Empire
During the Portuguese Empire period, started in the 15th century, until the Carnation Revolution of 1974, the economy of Portugal was centered in trade and raw materials related activities within its vast colonial possessions, mainly in Asia (spices, silk, dyes, porcelain and gems), Africa (ivory, timber, oil, diamonds and slaves) and South America (sugar cane, dyes, woods, and gold).
Portugal’s GDP per capita was at or above the level of other Western European countries until it began to decline in the mid-18th century—a downturn that historians now attribute to a “Dutch Disease” effect from the influx of gold from Brazil, leading to diminished exports and deindustrialization. It would not recover until the 20th century.
In 1822, the Portuguese colony of Brazil became an independent country, however, until 1974, Portugal managed to preserve its colonies/overseas territories in Africa, which included Angola and Mozambique, territories that would experience reasonable rates of economic growth until the departure of the Portuguese in 1975.
The economy of Portugal and its overseas territories on the eve of the Carnation Revolution (a military coup on 25 April 1974) was growing. Average family purchasing power was rising together with new consumption patterns and trends and this was promoting both investment in new capital equipment and consumption expenditure for durable and nondurable consumer goods. The Estado Novo regime economic policy encouraged and created conditions for the formation of large business conglomerates.
The regime maintained a policy of corporatism that resulted in the placement of a large part of the Portuguese economy in the hands of a number of strong conglomerates, of which, the most important were known as the "seven magnificent". These Portuguese conglomerates had a business model with similarities to South Korean chaebols and Japanese keiretsus and zaibatsus. Among the biggest conglomerates were those founded and held by the families Champalimaud, Mello (CUF group), Amorim and Santos (Jerónimo Martins group).
The CUF (Companhia União Fabril) group was the largest and most diversified of the Portuguese conglomerates. At one point, it became the largest industrial group in the Iberian Peninsula and one of the five largest in Europe. Its core businesses included the cement, chemicals, petrochemicals, agrochemicals, textiles, beer, beverages, metallurgy, naval engineering, electrical engineering, insurance, banking, paper, tourism and mining. Its main business activities and corporate headquarters located in mainland Portugal, but it also included branches, plants and several developing business projects all around the Portuguese overseas territories, especially in Angola and Mozambique.
Other medium-sized family companies specialized in textiles (for instance those located in the city of Covilhã and the northwest), ceramics, porcelain, glass and crystal (like those of Alcobaça, Caldas da Rainha and Marinha Grande), engineered wood (like SONAE near Porto), canned fish (like those of Algarve and the northwest which included one of the oldest canned fish companies in continuous operation in the world), fishing, food and beverage producing, tourism (well established in Estoril/Cascais/Sintra (the Portuguese Riviera) and growing as an international attraction in the Algarve since the 1960s) and in agriculture and agribusiness (like the ones scattered around Ribatejo and Alentejo – known as the breadbasket of Portugal, as well as the notorious Cachão Agroindustrial Complex established in Mirandela, Northern Portugal, in 1963) completed the panorama of the national economy by the early 1970s. In addition, rural areas' populations were committed to agrarianism that was of great importance for a majority of the total population, with many families living exclusively from agriculture or complementing their salaries with farming, husbandry and forestry yields.
The overseas territories of Angola and Mozambique (the largest Portuguese Overseas Provinces at the time) were internationally notable centres of production of oil, coffee, cotton, cashew, coconut, timber, minerals (like diamonds), metals (like iron and aluminium), banana, citrus, tea, sisal, beer, cement, fish and other sea products, beef and textiles.
Labour unions were not allowed and a minimum wage policy was not enforced. However, in a context of an expanding economy, bringing better living conditions for the Portuguese population in the 1960s, the outbreak of the colonial wars in Africa set off significant social changes, among them the rapid incorporation of more and more women into the labour market. Marcelo Caetano moved on to foster economic growth and some social improvements, such as the awarding of a monthly pension to rural workers who had never had the chance to pay social security.
The objectives of Caetano's pension reform were threefold: enhancing equity, reducing fiscal and actuarial imbalance, and achieving more efficiency for the economy as a whole, for example, by establishing contributions less distortive to labour markets or by allowing the savings generated by pension funds to increase the investments in the economy.
1974
The post Carnation Revolution period was characterized by chaos and negative economic growth as industries were nationalised and the negative effects of the decoupling of Portugal from its former colonies were felt. Heavy industry came to an abrupt halt. All sectors of the economy from manufacturing, mining, chemical, defence, finance, agriculture and fishing went into free fall.
Portugal experienced several years of negative growth. This was amplified by the mass emigration of skilled workers and entrepreneurs due to political intimidation, and the costs of accommodating in Portugal thousands of refugees from the former overseas provinces in Africa – the retornados.
After the Carnation Revolution's turmoil of 1974, the Portuguese economic basis changed deeply. The Portuguese economy had changed significantly by 1973 prior to the leftist military coup, compared with its position in 1961 – total output (GDP at factor cost) had grown by 120 percent in real terms. After the Carnation Revolution military coup of 1974, by abandoning its moderate-reformist, pro-democracy posture, the Movimento das Forças Armadas leadership set out on a course of sweeping nationalizations and land expropriations during a period known as PREC. Wide powers were handed over to the working class always having the concept of dictatorship of the proletariat in mind.
In 1960, Portugal's per capita GDP was only 38 percent of the EC-12 average. After Salazar's late shift in economic policy toward a more outward-looking, economically liberal direction due to the influence of a new generation of technocrats with background in economics and technical-industrial know-how, by the end of the Salazar period, in 1968, it had risen to 48 percent; and in 1973, on the eve of the revolution, Portugal's per capita GDP had reached 56.4 percent of the EC-12 average. In 1975, the year of maximum revolutionary turmoil, Portugal's per capita GDP declined to 52.3 percent of the EC-12 average. Convergence of real GDP growth toward the EC average occurred as a result of Portugal's economic resurgence since 1985. In 1991 Portugal's GDP per capita climbed to 54.9 percent of the EC average, exceeding by a fraction the level attained just during the worst revolutionary period. Portugal overtook Greece in terms of GDP per capita in 1992, but fell again below it in 1993. This situation endured until 2013 when Greece was more hardly hit by economic fallout from debt crisis.Economic Growth and Change, U.S. Library of Congress, countrystudies.us
The growth rate of Portuguese merchandise exports during the period 1959 to 1973 was notable – 11 percent per annum. In 1960 the bulk of exports was accounted for by a few products – canned fish, raw and manufactured cork, cotton textiles, and wine. By contrast, in the early 1970s (before the 1974 military coup), Portugal's export list reflected significant product diversification, including both consumer and capital goods. Several branches of Portuguese industry became export-oriented, and in 1973 over one-fifth of Portuguese manufactured output was exported.
There was a 16-percentage-point increase in the participation of the services sector from 39 percent of GDP in 1973 to 55.5 percent in 1990. Most of this growth reflected the exacerbated proliferation of civil service employment and the associated cost of public administration, together with the contribution of tourism services during the 1980s to the detriment of more sustainable and reproductive activities like manufacturing, exporting and technology/capital-intensive industries.
EU membership (1986)