Portugal has been named the top performing economy of 2025 by The Economist after a detailed evaluation of 36 of the world’s wealthiest nations.
Why Portugal Reached the Top
The Economist highlights Portugal for delivering one of the strongest economic combinations of the year. The country recorded solid GDP growth, low inflation, strong employment numbers and an impressive performance in its stock market.
In the third quarter of 2025, real GDP grew by around 2.4 percent year on year, and the main stock market index rose close to 20.9 percent. In the words of the magazine, the Portuguese economy feels “as sweet as a custard tart”, a reference to the country’s famous pastel de nata, used to describe the favourable blend of economic indicators.
Key Drivers of Growth
Tourism and services played a major role in Portugal’s success. The Economist notes that the strong recovery and expansion of tourism, combined with growing foreign investment and the arrival of high earning residents attracted by tax incentives, helped push the economy forward.
The increase in capital inflows, consumer demand and service based activity created a positive cycle that strengthened overall economic performance at a time when many other countries are dealing with slowdowns.
A Shift in Global Economic Leadership
Portugal’s first place represents a significant shift compared with previous years. Spain, which held the top position in 2024, dropped to fourth place in the 2025 ranking. Ireland reached second place and Israel secured third.
What This Means for Portugal’s Future
This recognition sends a strong message to investors and international observers. Portugal is seen as a stable and resilient economy with a favourable environment for investment. The performance of 2025 may attract even more foreign interest in areas such as real estate, tourism, services for expatriates and technological development.
At the same time, some analysts point out that national debates about inequality, cost of living and long term sustainability remain important. Strong macroeconomic numbers do not always translate into equal improvements in living standards for all segments of the population.
| Indicator (Q3 2025, YoY) | Value |
|---|---|
| Real GDP Growth | 2.4 % |
| Stock Market Performance | 20.9 % |
| Position in The Economist Rank | Number 1 |