Portugal’s GDP per capita is projected to fall to 77% of the European average in 2025 following a population revision by the National Institute of Statistics (INE). According to economist Óscar Afonso, the increase in the national population to 11.4 million people—driven by exceptionally high migration flows—reduces the wealth distributed per inhabitant and could drop Portugal to 22nd place in the European ranking.
How did the INE population revision change the numbers?
The recent revision by the INE provides new population figures for the years 2021 through 2025. These updates reflect migration flows that were not fully incorporated into previous statistics. As a result, the Portuguese GDP per capita in Purchasing Power Parity (PPS) is now expected to drop from 81.3% of the European average to 77% by 2025.
Óscar Afonso, director of the Faculty of Economics at the University of Porto, notes that this shift changes Portugal’s standing significantly. While previous Eurostat data—which has not yet been updated—placed Portugal in 18th or 19th place, the new calculations suggest the country will be overtaken by Estonia (79%), Croatia, and Romania (both at 78%).
Why is Portugal’s economic ranking falling?
The data shows a progressive degradation in Portugal’s relative economic position over the last five years. According to calculations by Afonso, the GDP per capita has seen consistent downward revisions:
- 2021: Dropped from 73.8% to 73.2%
- 2022: Dropped from 77% to 74.9%
- 2023: Dropped from 81.1% to 77.5%
- 2024: Dropped from 82.4% to 78%
This trend follows a period where Portugal held the 18th position in 2016 and the 19th position between 2017 and 2019. Since the pandemic, the country’s best performance has been a 21st-place ranking.
What role does migration play in these statistics?
Afonso explains that while migration has helped the state maintain budget surpluses and reduce debt, it has not increased wealth per person. He attributes this to the fact that Portugal has not increased the specialization of its labor market, relying instead on low-value-added activities such as tourism and labor-intensive industry.
The economist suggests that the current economic structure is “blocked.” He states that the decline in per capita GDP explains why families are facing increased debt and why wages remain low. Additionally, Afonso notes that Portugal has experienced the largest gap in the EU between housing prices and income levels.
What could happen next?
The economic outlook depends on whether the government implements reforms to address current investment blocks. Afonso argues that the government should have already begun reforming the economy, noting that two years have passed since Luís Montenegro took office.
If the current “blocks to investment” are not addressed, the country may continue to struggle with an “enormous State” and an expressive tax burden. Analysts suggest that without a shift toward more productive economic activities, the gap between income and the cost of living could persist.
Frequently Asked Questions
Why did Portugal’s GDP per capita decrease?
The decrease is due to a population revision by the INE, which increased the estimated population from 10.7 to 11.4 million people, reducing the amount of wealth available per inhabitant.
Which countries are expected to overtake Portugal in the European ranking?
According to Óscar Afonso, Portugal is expected to be surpassed by Estonia, Croatia, and Romania.
How does migration affect the Portuguese economy?
Afonso states that immigrants help the state achieve budget surpluses and reduce debt through increased employment, but they have not helped increase the wealth per inhabitant because the economy relies on low-value-added sectors.
Do you believe economic growth should be measured by total GDP or by wealth per inhabitant?
Related reading