Portugal’s credit profile is underpinned by a relatively high GDP per capita, a buoyant tourism sector, strong institutions and an improving banking sector. Portugal has also displayed a strong record of implementing structural reforms; thereby improving economic and fiscal conditions. Notwithstanding these positives; the economy continues to be burdened by high debt and a deeply negative net international investment position. Moreover, it also remains susceptible to external shocks due to a slowdown in the European Union that constitutes 71% of its total trade.

Looking ahead, continued commitment to bringing out reforms and increasing investment associated with the European Commission’s National Resilience and Recovery Plan (NRRP) could further aid economic growth. Though there are expectations of policy continuity, reforms implementation under the new minority government would be a key monitorable.