Portugal has been named “Economy of the Year” for 2025 by The Economist, topping a ranking of the 36 richest countries in the world and overtaking last year’s leader, Spain. The achievement marks a major milestone for Portugal at a time when the country is already attracting global attention for its quality of life, booming tourism sector and increasing inflow of foreign residents.
For the fifth consecutive year, The Economist has assessed the world’s richest economies using five key indicators:
inflation, inflation deviation, GDP growth, employment and stock market performance.
In 2025, Portugal emerged as the best overall performer.
According to the magazine:
“Portugal managed to combine strong GDP growth, low inflation and a booming stock market.”
Spain, last year’s winner, fell to share its score with Colombia, while Ireland claimed second place and Israel took third. At the bottom of the table were Estonia, Finland and Slovakia.
Tourism and International Residents Fuel Growth
A central driver behind Portugal’s economic momentum is its tourism sector, which continues to set records, particularly in the Algarve, Lisbon and Porto. The influx of visitors supports employment, business expansion and new infrastructure projects across the country.
But The Economist also highlights another structural force behind Portugal’s success:
“…many wealthy foreigners are moving to the country to take advantage of low tax rates.”
This movement of internationally mobile professionals, retirees, and business owners has increased domestic investment, strengthened real estate markets, and boosted demand for financial, legal, and lifestyle services. Combined with political stability and EU protections, Portugal has begun to outpace many Western economies in resilience and long-term attractiveness.
A Positive Signal for Residents and Future Expats
Prime Minister Luís Montenegro celebrated the ranking on the social platform X, calling it:
“A just acclamation of the merit and work of the Portuguese people.”
He added that continued reforms aimed at competitiveness and productivity will help Portugal:
- create more jobs
- increase wages
- strengthen public services
- improve long-term wellbeing for citizens and residents
Government forecasts point to 2% economic growth this year and 2.3% in 2026, reinforcing confidence in the country’s trajectory.
Why Portugal’s “Economy of the Year” Title Matters for Those Considering Relocation
Portugal’s strong performance is more than a headline — it signals that the country is becoming one of the most strategically favourable places to live, invest and retire. For those contemplating a move, here’s what this recognition means:
1. A Stable, Growing Economy for Long-Term Wealth Planning
Economic strength provides confidence. Portugal’s combination of growth, low inflation, and strong markets could offer a foundation for:
- pension planning
- wealth preservation
- business investment
- long-term residency
- property ownership
In contrast to more volatile economies across Europe, Portugal is viewed as a relatively safe harbour for international finances.
2. Attractive Tax Structures for International Residents
Portugal continues to offer highly competitive tax opportunities for new residents, including:
- advantageous structuring for UK pension transfers or drawdown
- investment wrappers (widely used across EU jurisdictions)
- beneficial succession and estate-planning options
- lower effective taxation levels compared with other Western European countries
These factors often attract HNWIs, retirees, remote professionals and entrepreneurs who want predictability and efficiency in their financial planning.
3. Strong Employment Growth and a Rising Business Landscape
For those relocating for work or entrepreneurship, Portugal’s employment growth and rising start-up ecosystem (particularly in Lisbon, Porto and the Algarve) create:
- opportunities for skilled professionals
- supportive conditions for new businesses
- an influx of international talent
- a growing service economy
The result is a dynamic environment where personal and professional ambitions can thrive.
4. A Reinforced Property Market
Economic stability and continued foreign demand underpin long-term confidence in property values. While regions like the Algarve and Cascais remain premium markets, Portugal still offers comparative value versus Spain, France or Italy — with strong potential for rental income and capital appreciation.
5. Quality of Life Meets Financial Advantage
Portugal’s economic improvements are paired with lifestyle benefits widely recognised by expats:
- high safety rankings
- warm climate and outdoor living
- excellent private healthcare
- English widely spoken
- strong expat communities
- world-class beaches and cultural heritage
With the cost of living remaining more affordable than much of Western Europe, residents enjoy a balanced quality of life without compromising financial stability.
Portugal’s Recognition Reflects a Broader Trend
Portugal’s win as “Economy of the Year” is not an isolated event — it is part of a broader pattern of accelerating growth, rising international reputation and strong fundamentals.
Portugal is no longer just one of Europe’s most desirable lifestyle destinations — it is one of its strongest economies as well.
This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.