Until the 1980s Portugal was one of the least developed economies in Western Europe, with a farm-based economy and an industry protected by the dictatorship. After joining the European Community in 1986 it caught up quickly, then went through a severe debt crisis between 2010 and 2014 and finally a solid recovery. Average income per person remains below that of neighbouring Spain and the EU average, but the gap has narrowed in recent years.
The economy in figures
According to the European Commission's Spring 2026 forecast, in 2025 GDP grew by 1.9%, more than the euro-area average, unemployment fell to 6% and the public accounts closed with a surplus of 0.7% of GDP. Public debt, which had passed 130% of GDP after the crisis and the pandemic, fell to 89.7%, one of the fastest declines in Europe. The minimum wage, long among the lowest in Western Europe, has been raised every year and in 2026 stands at 920 euros gross a month, paid fourteen times a year. More data are on the Portugal statistics page.
The driving sectors
Tourism has become one of the economy's main engines: in 2024 tourist accommodation welcomed more than 31 million guests and tourism revenue exceeded 27 billion euros, an all-time record. Lisbon, Porto, the Algarve and Madeira are the strongest destinations, but tourism is also growing in the interior.
Industry is far more diversified than in the past. The car sector is led by the Volkswagen Autoeuropa plant at Palmela, near Setúbal, and a network of parts makers. Traditional industries remain strong and have been thoroughly modernised: textiles and above all footwear from the north, among the most highly regarded in the world for quality, paper and pulp, ceramics and glass, and food processing. The tech sector has also grown strongly, with Lisbon and Porto becoming hubs for start-ups, service centres and large digital companies; since 2016 Lisbon has hosted Web Summit.
Energy is another strength: thanks to wind, hydro and solar power, about two thirds of the electricity consumed comes from renewables, and Portugal closed its coal plants in 2021, among the first countries in Europe to do so.
The traditional sectors
Agriculture now accounts for a small share of GDP but remains important for the land and for quality exports. The main products are wine, with the great regions of the Douro, the Alentejo and Vinho Verde, port and Madeira, and olive oil, whose output has soared thanks to new intensive olive groves in the Alentejo irrigated by the Alqueva dam. Fruit, vegetables, rice and processing tomatoes follow.
Portugal is the world's leading cork producer, from the cork oaks of the Alentejo and Ribatejo, used for stoppers, flooring, insulation and design objects. Pine and eucalyptus forests feed the timber and paper industries.
Fishing has a long tradition: the Portuguese are among the world's biggest fish eaters and the country is famous for sardines, octopus and canned fish; bacalhau, salt cod, once caught by Portuguese trawlers as far as Newfoundland and Greenland, is now mostly imported from Norway. Crafts, from ceramics and azulejos to the lace of Vila do Conde and Peniche and the embroidery of Madeira and Viana do Castelo, are an excellence that also feeds tourism.
Open problems
The country still faces some structural weaknesses: low productivity and average wages compared with the EU average, which push many young graduates to emigrate; the sharp rise in house prices in Lisbon, Porto and the Algarve, linked partly to tourism and the arrival of foreigners; an ageing population; and slow courts and bureaucracy. For practical aspects see also the pages on the cost of living, working and doing business in Portugal, and for recent history the page on the economy up to 2007.