Portugal Forecasts Surplus, Cuts Taxes Amid Economic Growth

As of October 9th, 2025, Portugal's center-right minority government has presented its 2026 budget bill, projecting a slightly stronger economic expansion and a small budget surplus for the fourth consecutive year.

The government expects the economy to grow by 2.3% in 2026, up from a predicted 2.0% expansion this year. This growth will be driven by a 5.5% increase in investment, supported by the final year of the European Union's pandemic recovery plan.

Despite the new tax cuts for companies and lower-income households, the budget bill forecasts a surplus of 0.1% of gross domestic product, down from 0.3% in 2024. Portugal's surpluses, aided by solid growth and low unemployment, have been a rare achievement among Eurozone members, reflecting the country's efforts to maintain strong public finances after the 2011 debt crisis.

The government also plans to further reduce the public debt ratio, which is expected to fall to 87.8% of GDP in 2026 from 90.2% this year. Finance Minister Joaquim Miranda Sarmento emphasized the importance of maintaining balanced budgets and continuing the debt reduction to protect Portugal from external shocks.