Portugal’s Economy Shows Resilience as Wage Growth Outpaces Inflation
Lisbon – Portugal’s economy continues to demonstrate positive momentum, with real wages increasing by 13.7% over the past two years, according to Minister of Economy Manuel Castro Almeida. The minister presented these figures during a hearing before the Committee on Economy and Territorial Cohesion on Wednesday, March 18, 2026, stating that the increase is equivalent to an additional month’s salary for Portuguese workers and a significant portion of a 16th month. This positive trend comes amidst ongoing concerns about the impact of adverse weather conditions on projects funded by the country’s Recovery and Resilience Plan (PRR).
Almeida emphasized that despite challenges, the Portuguese economy is performing well, with employment at record highs and a balanced public account showing a surplus of 0.3% of GDP. He similarly noted that public debt is below 90% of GDP, and exports remain positive, reaching €2.8 billion despite exceeding imports. The minister’s comments come as Portugal navigates a period of economic recovery and seeks to maximize the benefits of the PRR, a key component of the nation’s post-pandemic strategy.
Wage Growth and the Impact of Inflation
According to Minister Castro Almeida, the 13.7% increase in real wages, calculated after deducting inflation, represents a substantial improvement in the purchasing power of Portuguese citizens. He illustrated this point by stating that, instead of being able to purchase 1 kg of potatoes, citizens can now afford 1.3 kg. This growth in real wages is particularly noteworthy when compared to other OECD countries, where Portugal experienced the largest increase in average net salaries in 2024. While specific figures for 2025 are still preliminary, Almeida reported a relevant growth of 8.2% in net salaries, contributing to the overall two-year increase.
The minister acknowledged that some projects within the PRR are facing delays due to recent severe weather events. However, he assured the committee that solutions are being sought to ensure these projects can continue, either with or without PRR funding. Projects that cannot be completed on time will be excluded from the PRR and replaced with alternative investments, preventing a landscape of unfinished construction sites across the country. CNN Portugal reported on the minister’s assurances regarding continued investment despite these setbacks.
Economic Performance and Key Indicators
Minister Almeida characterized the overall performance of the Portuguese economy in 2025 as “globally positive,” with growth exceeding the European average, although he described it as “not exuberant.” He highlighted the significant contribution of consumption, which accounted for 2.5 percentage points of GDP expansion. Investment contributed one percentage point, while imports had a negative impact of two percentage points. He suggested that had exports matched the growth of imports, the increase in GDP would have been even more substantial.
Exports reached €80 billion, although a decline in December, attributed to maintenance work at the Galp refinery, a major exporter, impacted the annual result. Almeida clarified that this downturn was not structural in nature. Imports increased by 3.9%, largely driven by the acquisition of equipment rather than consumer goods. Businesses anticipate a 5.1% increase in exports in 2026, signaling continued confidence in the Portuguese economy.
Tourism’s Contribution and Future Prospects
The tourism sector also played a crucial role in Portugal’s economic growth, generating €30 billion in revenue in 2025, a 6.1% increase compared to the previous year. Almeida emphasized Portugal’s position as the 12th most developed tourist destination globally and stressed the importance of leveraging this potential. He advocated for focusing on improving the quality of tourism offerings to further enhance revenue generation. Portugal’s strategic location and rich cultural heritage continue to attract visitors from around the world, bolstering the nation’s economy.
Manuel Castro Almeida, born on October 28, 1957, has held several key positions in Portuguese politics, including serving as Secretary of State for Regional Development under the government of Pedro Passos Coelho. According to the Portuguese government website, he currently serves as the Minister of Economy and Territorial Cohesion, a role he has held since June 2025. Prior to his current position, he served as Minister of Territorial Cohesion and as a Deputy in the Assembly of the Republic.
Challenges and Remaining Goals
Despite the positive economic indicators, Minister Almeida acknowledged that there is still work to be done. He pointed out that Portugal’s per capita income remains at 82% of the EU average, indicating a gap that needs to be addressed. He encouraged members of parliament to recognize the achievements of this legislative period, highlighting the unprecedented increase in real wages, while also emphasizing the need for continued efforts to improve the economic well-being of Portuguese citizens.
Almeida also addressed concerns about the impact of the PRR delays, reiterating his commitment to finding solutions to ensure the continuation of vital infrastructure projects. The government is actively exploring alternative funding mechanisms and prioritizing projects that can be completed within the allocated timeframe. The successful implementation of the PRR remains a key priority for the Portuguese government, as it is seen as crucial for driving long-term economic growth and competitiveness.
The minister’s statements come at a critical juncture for the Portuguese economy, as the nation seeks to consolidate its gains and address remaining challenges. The focus on wage growth, coupled with efforts to attract investment and promote tourism, positions Portugal for continued economic success in the years ahead. The government’s commitment to fiscal responsibility and sustainable development will be essential for ensuring long-term prosperity.
The next key date for updates on the PRR and economic performance will be the release of the first-quarter economic report in June 2026. Readers are encouraged to follow the Ministry of Economy and Territorial Cohesion’s website for the latest information and developments. Share your thoughts on Portugal’s economic outlook in the comments below.