LISBON, Oct. 7 (Xinhua) -- The Portuguese economy is projected to grow by 2.3 percent in 2026, accelerating from previous estimates, the Bank of Portugal said Wednesday in its latest economic bulletin.
This growth is driven by Recovery and Resilience Plan (PRR) fund disbursements, fiscal measures and stronger export performance, the bank said.
The forecast represents an upward revision of 0.5 percentage points from the June projection, and Portugal's growth is expected to remain above the eurozone average throughout the 2026-2028 period.
Inflation, meanwhile, is forecast to reach 3.1 percent in 2026. It will then ease to 2.4 percent in 2027 and 2.0 percent in 2028, as the effects of the energy shock dissipate and labor cost growth moderates, in line with eurozone projections.
The labor market is expected to remain favorable, though employment growth will slow, in the context of reduced migration flows compared with 2021-2024. Employment is projected to grow by 1.7 percent in 2026, 0.7 percent in 2027 and 0.3 percent in 2028.
The composition of growth is expected to shift, with a smaller contribution from private consumption and a larger one from exports. Real household income is projected to slow, reflecting wage deceleration and, in 2026, the unanticipated impact of higher prices.
The Bank of Portugal has identified predominantly downside risks to economic activity and upside risks to inflation, with both largely contingent on the evolution of geopolitical tensions in the Middle East. ■