What is the DBRS rating and economic outlook for Portugal in 2025?

Valerie Charoux
Jul 19
4 min read

News Economy Europe – Here is Portugal’s credit rating in 2025, including Portugal’s Economic Outlook, fiscal position, public debt ratio forecast, GDP growth forecast, EU funding amounts, Net International Investment Position, as well as the impact of US tariffs on Portugal’s exports to the US, the resilience of Portugal’s banking system and Portugal’s house prices forecast, according to the DBRS July 2025 report:

Portugal’s Credit Rating for foreign & local currency according to the DBRS July 2025 announcement:

Portugal’s credit rating according to the Morningstar DBRS announcement on July 18^th, 2025, is A (high) with a stable outlook both for long-term foreign and local currency.

Portugal’s credit rating according to the Morningstar DBRS announcement on July 18^th, 2025, is R-1 (middle) with a stable outlook both for short-term foreign and local currency.

Portugal’s Economic Outlook according to the DBRS in July 2025:

The Stable trend reflects Morningstar DBRS' view that the risks to Portugal’s credit ratings are balanced. Portugal's economic growth and fiscal balance is expected to outperform the eurozone average over the next two years, despite risks associated with escalating global trade and geopolitical tensions.

Portugal's medium-term economic growth prospects remain favorable, underpinned by the strength of domestic demand. Healthy real income growth, lower interest rates, and increased spending from Portugal's Recovery and Resilience Plan are expected to support growth in 2025 and 2026, although trade tensions and increased trade uncertainty limit growth and pose downside risks to the economic outlook.

Portugal’s fiscal position according to the DBRS July 2025 report:

Portugal's current fiscal position is among the strongest in the eurozone, posting fiscal surpluses in 2023 and 2024.

Portugal recorded a fiscal surplus of 1.2% of GDP in 2023 and 0.7% of GDP in 2024, the third and fifth best results in the eurozone, respectively. The government projects the fiscal surplus to narrow further to 0.3% of GDP in 2025, as the increase in public wages and pensions, the further reduction of personal income tax rates, and the revision of the personal tax scheme for young people will only be partially offset by revenue growth and the unfreezing of the carbon tax and further reduction of the energy measures in 2025. Portugal's National Medium-Term Fiscal-Structural Plan 2025-2028 projects the headline fiscal surplus to narrow further to 0.1% of GDP in 2026, before increasing to 1.1% in 2027 and 1.3% in 2028.

Portugal’s public debt ratio forecast according to the DBRS July 2025 report:

Portugal's public debt ratio declined sharply from 116.1% of GDP in 2019 to 94.9% in 2024 driven mainly by high primary surpluses and nominal output growth. The public debt ratio is on track to fall below 90.0% of GDP over the next two years, which could place Portugal's debt ratio below the eurozone average.

Portugal’s government projects that the public debt ratio will decline to 91.5% of GDP in its 2025 Annual Progress Report and fall further to 83.2% in 2028 in its 2025-2028 National Medium-Term Fiscal-Structural Plan. This decline is principally driven by the conservation of primary surpluses and nominal GDP growth. Moreover, this trend could be reinforced by the government's planned asset sales.

Similarly, the IMF projects that Portugal’s public debt ratio will decline more rapidly over the medium term to 75.8% in 2030, with an average reduction of 3.2 percentage points per year during 2025-2030.

Portugal’s GDP growth forecast according to the DBRS July 2025 report:

The European Commission forecasts Portuguese real GDP growth of 1.8% in 2025 and 2.2% in 2026, above the 0.9% and 1.4% of the euro area, respectively. Similarly, the Bank of Portugal forecasts real GDP growth of 1.6% in 2025, weighed down by escalating global trade tensions. The central bank forecasts real GDP growth to accelerate to 2.2% in 2026 as investments benefit from the ramp-up of RRP investments and lower interest rates, before coming down to 1.7% in 2027 as the impulse from the RRP fades.

Portugal’s EU funding amounts according to the DBRS July 2025 report:

Portugal's RRP amounts to EUR 22.2 billion (8.3% of GDP of 2023's GDP) in grants and loans, which comes on top of the EUR 33.6 billion (12.6% of GDP) in grants from the Multiannual Financial Framework 2021-27.

Portugal’s Net International Investment Position according to the DBRS July 2025 report:

Portugal's net international investment position (NIIP) reflects an elevated net debtor position but has improved sharply from -124.4% of GDP in 2014 to -57.6% in Q1 2025. The improvement was driven by current account surpluses and nominal economic growth.

Similarly, Portugal’s net external debt has declined from 107.7% of GDP in 2014 to 44.0% of GDP in Q1 2025. These trends are expected to continue over the medium-term.

What is the expected impact of US tariffs on Portugal’s exports to the US according to the DBRS July 2025 report:

Portugal's good exports exposure to the US market (6.7% of goods exports) is commensurate to the eurozone one. Portugal's exposure to the U.S. market is heavier on the services side (10.3% of total service exports), which are not subject to the current tariffs.

After a small surplus of 2.2% of GDP in 2024, the IMF projects current account surpluses of 1.5% of GDP for the period 2025-2030.

What is the resilience of Portugal’s banking system according to the DBRS July 2025 report:

The Portuguese banking system weathered the succession of shocks in recent years well, supported by stronger balance sheets, government support measures, and a strong labor market. In aggregate, the Portuguese banking sector compares favorably to the European average in terms of capitalization and liquidity metrics.

What are Portugal’s house prices forecast according to the DBRS July 2025 report:

Portugal’s rapid rise of house prices, which more than doubled since the start of 2016, has continued despite tighter financial conditions in the euro area. The pass-through from lower monetary policy rates and the government support measures (e.g., benefiting young buyers) are driving a sharp recovery in mortgage lending growth, transactions, and prices in the first months of the year.