Portugal named “Economy of the Year” by The Economist

Portugal has been recognised by The Economist as the Economy of the Year (2025), topping the magazine’s annual ranking that assesses the performance of the world’s 36 richest countries.

The distinction reflects a rare combination of solid GDP growth, low inflation and a rising equity market. In its analysis, The Economist highlights the continued strength of tourism and the country’s ability to attract foreign residents, supported by a competitive fiscal environment.

In this year’s table, Portugal succeeds 2024’s winner, Spain (now 4th). Ireland and Israel take 2nd and 3rd place, while Estonia, Finland and Slovakia sit at the lower end of the ranking across the indicators reviewed (inflation level and deviation, GDP, employment and stock-market performance).

Portugal’s Prime Minister, Luís Montenegro, called the recognition “a just acknowledgement of the merit and work of the Portuguese,” adding that the Government’s focus on reforms to competitiveness and productivity aims to keep creating jobs, raising wages and reinforcing the social state. Official projections currently point to GDP growth of 2.0% in 2025 and 2.3% in 2026.

Why is this good news for investors

• Macro stability supports planning. Low inflation alongside growth improves visibility for capital deployment and long-term underwriting.
• Market confidence is improving. A positive equity market and employment trend signal a supportive business climate for company formation and expansion.
• Portugal’s competitiveness is rising. An ongoing reform agenda and a pragmatic fiscal stance strengthen the country’s appeal for foreign direct investment.