Portugal: Q4 2025 Revised Upward; 2026 Outlook Remains Positive

GDP grew by 0.9% q/q in Q4 2025. This figure is a 0.1 percentage point (pp) upward revision from the first estimate released on 30 January 2026. Full-year GDP growth for 2025 reached 1.9%, down from 2.4% in 2024 , but still above the euro area average . Today's detailed national accounts show that the main contributor to quarterly GDP growth was again domestic demand excluding changes in inventories. Albeit decelerating from the previous quarter, domestic demand grew by 0.7% q/q in Q4, decelerating from 1.6% q/q growth in Q3. This was driven by a sharp slowdown in gross fixed capital formation (GFCF), which fell from +3.9% q/q in Q3 to +0.3% in Q4. This weakness stemmed from a correction in transport equipment investment, which fell by 16.9% q/q following an exceptional 29.6% q/q jump in Q3. Other investment categories posted positive growth. Notably, investment in machinery and equipment saw a further acceleration to +4.6% q/q in Q4, after +3.1% in Q3 and +2.1% in Q2. Household consumption contributed 0.6 pp to quarterly growth, despite a slight slowdown from +1.1% q/q in Q3 to +0.9% in Q4. The contribution from changes in inventories was strongly negative, subtracting 0.9 pp from growth. Finally, the trade balance contributed +1.1 pp in Q4, a sharp reversal from -0.9 pp in Q3. However, this positive contribution was mainly due to imports falling more sharply (-2.9% q/q) than exports (-0.6% q/q). With the fourth quarter print , the growth carry-over for 2026 stands at 1.6%. We forecast a slight acceleration in growth to 2.3% in 2026, which should continue to be supported by robust domestic demand. Household incomes and the labour market are expected to remain supportive factors. The investment outlook is more difficult to anticipate, as international uncertainties continue to weigh on business confidence . Nevertheless, spending of the final NGEU programme funds, still-accommodative monetary and financial conditions, and resilient domestic demand will provide support to investment . Finally, the negative contribution from foreign trade seen in 2025 (-1.8 pp) should be less of a drag in 2026, or even slightly positive, amid a normalisation of global trade, ceteris paribus.