In a rare accolade for a eurozone peripheral economy, Portugal has been crowned “Economy of the Year 2025” by the London-based magazine The Economist, edging out 35 other high-income countries in its annual ranking of the world’s richest economies.
The distinction, announced on Wednesday, recognises Portugal’s ability to deliver a balanced mix of robust GDP growth, subdued inflation, a resilient labour market and a buoyant stock exchange – a combination few advanced economies managed to achieve in a year still marked by global uncertainty.
“Portugal stood out in 2025 by combining strong GDP growth, low inflation and a high-performing stock market,” The Economist wrote, praising the country’s post-pandemic recovery trajectory. Tourism, which shattered pre-COVID records, and a surge in foreign direct investment in technology, renewables and real estate were highlighted as key drivers.
Preliminary data show Portugal’s economy expanded by around 2 per cent in 2025, with forecasts for 2026 upgraded to 2.3 per cent – figures that place it well above the eurozone average. Headline inflation cooled to the low single digits, while the benchmark PSI index posted double-digit gains, buoyed by listed tourism giants and a wave of IPOs from fast-growing start-ups.
Prime Minister Luís Montenegro hailed the award as “a fair recognition of the merit and hard work of the Portuguese people”. Speaking at an event in Lisbon, he said the global recognition “reinforces our commitment to structural reforms, greater economic competitiveness, wage growth and strengthening the social state”.
The centre-right government, in power since early 2024, has focused on fiscal discipline, tax incentives for investment and labour-market flexibility – policies that analysts say have helped attract skilled expatriates and remote workers in record numbers.
For Asia-Pacific investors and corporations keeping a close eye on Europe, Portugal’s turnaround offers a compelling case study. Bilateral trade with Asia, especially China, South Korea and India, has grown sharply, driven by Portuguese exports of cork, olive oil, wine and increasingly sophisticated components for electric vehicles and renewable-energy projects.