The Forum for Competitiveness maintains the expectation that the Portuguese economy will grow close to 2% this year, despite the deterioration of expectations for the second half of 2026. The 2.5% growth recorded in the first semester should ensure this result, even though investment is declining and productivity has also fallen. In the August economic outlook note, the national think-tank reinforces that a lot would have to go wrong for full-year growth to fall well below 2%.
This forecast remains despite the less encouraging signs for the rest of the year. The Bank of Portugal's daily activity indicator signals a drop in July and August, suggesting a weak start to the second semester, while confidence indices have fluctuated. The investment decline is surprising given the Recovery and Resilience Plan, which should boost this component of GDP, but the weakness comes mainly from the "other machinery" category, suggesting the program is not managing to stimulate the economy.
In external trade, second quarter figures were promising, but geopolitical tensions and supply chain disruptions require restraint in projections through the end of the year. The Forum does not expect strong investment dynamism in the coming quarters.
Externally, the scenario is even less favorable. Hopes for a peace agreement in the Middle East are increasingly slim and oil has risen again, anticipating energy price increases. The European Central Bank is expected to raise interest rates, while sovereign debt yields continue their upward trajectory, which will penalize public finances.
