The report forecasts GDP growth of 1.8% for the first half of 2026, maintaining the estimate made in March.

However, this growth is accompanied by an adjustment in inflation forecasts, driven mainly by the increase in energy prices resulting from the escalation of the conflict in the Middle East.

The Portuguese economy, which last year exceeded expectations with 1.9% growth and achieved a budget surplus of 0.7%, now faces a more uncertain scenario, according to the institution headed by Mario Centeno. The Bank of Portugal (BdP) notes that growth prospects are limited by rising oil prices, tighter financial conditions, and weaker external demand.

Despite a challenging first quarter, marked by storms and floods that resulted in zero percent contraction in the quarterly change, domestic consumption and investment are showing signs of recovery.

The government, for its part, maintains a slightly more optimistic forecast, placing annual growth at two percent.

One of the most significant changes in this update is the inflation forecast.

The central bank revised the harmonized inflation rate upwards for 2026, setting it at 3.1%, compared to the 2.8% forecast in March. This increase contrasts with the 2.2% inflation recorded in 2025, when prices are expected to moderate their rise from 2027 onwards, settling at 2.4%.

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