High-Speed Rail: Lisbon - Porto

The high-speed rail (HSR) project, which was originally announced more than 20 years ago, aiming to cut in half the time used to travel by train between the cities of Lisbon and Porto, as well as other cities of significant size in Portugal, has resumed. Although previous governments had significant difficulties in implementing the project, the current Minister of Infrastructure and Housing, Pedro Nuno Santos, has announced earlier this year that the project is under review and construction of the HSR is expected to take-off in 2024 and completion is expected by 2030. The project also aims to connect Portugal’s capital city with Spain, in an effort to increase the connectivity of the country with the rest of the Eurozone through high-speed railways.

The construction of the HSR is expected to generate positive economic impacts as the increased connectivity resulting from quicker transport is likely to increase one-day trips between both metropolitan cities and reshape travel patterns across the regions. It is also expected that urban areas along the route will be incentivised to further develop as a direct result of the increased traffic of individuals passing through those areas.

It should also be noted that countries that invest in HSR are susceptible to experience positive externalities such as knowledge spillovers, greater efficiency in the allocation of infrastructure, and increased employment opportunities. These changes generally allow cities to evolve faster and gain from an increase in economic growth. As such, we anticipate economic development in urban areas as a result of the HSR project.