PORTUGAL DECODED shares five key predictions for Portugal in 2025, covering everything from economic growth to local elections.
1. Presidential Bid 2026
Admiral Henrique Gouveia e Melo is widely seen as the leading contender for Portugal’s Presidential elections in January 2026. Known for his success as the coordinator of Portugal's COVID-19 vaccination campaign, the 64-year-old, born in Mozambique, has consistently topped opinion polls as a favorite for the Presidency of the Republic.
Interest in his political aspirations intensified when Gouveia e Melo recently stepped down as Chief of the Navy Staff, a decision he finalized two weeks ago. According to SIC, he is expected to officially announce his candidacy in March 2025.
2. Lisbon Mayoral Race
Local elections for the 2025-2029 term are set to take place in September or October, during which voters will select municipal and parish assembly members, councilors, and mayors. This election cycle is significant, as around 100 municipalities will see new leadership due to the three-term limit for mayors.
The elections will serve as a key indicator of power dynamics between the ruling parties and the Socialist Party (PS), which currently holds dominance at the local level. For the Mayor of Lisbon, the PS has yet to confirm a candidate, but speculation suggests it could be between two prominent figures: former Minister of the Presidency Mariana Vieira da Silva or former Minister of Public Administration Alexandra Leitão.
Economic Growth Outlook for 2025
The Portuguese economy is poised for a faster growth rate in 2025 after a slowdown in 2024. Following a 2.5% GDP expansion in 2023, growth dipped to an average of 1.7% in 2024, but forecasts suggest a rebound. Below are the key projections from various institutions:
Institution | GDP Growth Forecast (2025) |
Ministry of Finance | 2.1% |
European Commission | 1.9% |
OECD | 2.0% |
Bank of Portugal | 2.2% |
International Monetary Fund (IMF) | 2.3% |
Public Finance Council | 2.4% |
Other key economic indicators forecasted for 2025, as per the Bank of Portugal's December Economic Bulletin, include:
Economic Indicator | Growth Forecast (2025) |
Exports of Goods and Services | 3.2% |
Private Consumption | 2.7% |
Investment | 5.4% |
4. State Budget Challenges in 2026
Pedro Nuno Santos, leader of the Socialist Party, has announced that he will not negotiate the 2026 State Budget in 2025. Without Socialist support, it is unlikely the 2026 budget will pass. After September 9, 2025, the President will lose the power to dissolve the Assembly due to the six-month restriction before his term ends (Presidential elections are set for January 2026).
As a result, Portugal will likely operate under the 2025 State Budget throughout most of 2026, entering a provisional financial arrangement known as the "duodécimos" regime. Under this system, the government can spend one-twelfth of the 2025 budget each month. A new budget and potential legislative elections can only be addressed after mid-July 2026, once the new Parliament is formed.
5. Housing Prices
Housing prices in Portugal continue to rise, with Eurostat reporting a 7.8% increase in Q2 2024 compared to the same period in 2023. Key drivers of this growth include:
Factors Driving Housing Prices | Impact |
Lower interest rates on housing loans | Increased affordability for buyers |
IMT and IS tax exemptions for first-time young buyers | Reduced upfront costs for younger buyers |
Public guarantee for housing loans (under 35) | Easier access to credit for younger individuals |
Higher purchasing power and savings | More buyers entering the market |
Despite these demand-side measures, Mário Centeno, Governor of the Bank of Portugal, warns that such policies exacerbate housing shortages. Similarly, Paulo Macedo, CEO of Caixa Geral de Depósitos, predicts continued price increases in 2025 due to insufficient housing supply.
Infographic and data sourced from PORTUGAL DECODED
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