BFF Banking Group forecasts Portugal outpacing EU economy despite investment pressures

BFF Banking Group, in partnership with Nova School of Business and Economics, expects Portugal’s economy to expand more rapidly than the broader European bloc this year, despite headwinds from reduced investment, rising labour costs and persistent inflation. Recent data show a real-GDP increase in the second quarter that was roughly twice the eurozone average, while the job market improved, pushing unemployment to its lowest level since 2011 and lifting total employment to over five million.

However, shortages of workers in construction, health and technology have driven wage growth upward. Overall price growth stayed above the central bank’s goal, largely because of higher international energy prices affecting transport, restaurants and lodging. Fixed-capital formation fell in the quarter, reflecting the winding down of one outlet Recovery and Resilience Plan, prompting the group to stress the importance of the upcoming PTRR and Portugal 2030 funds for medium-term investment. Housing loans rose sharply in July, especially among younger buyers, and public-debt ratios are projected to fall below the eurozone average by 2026-27.