Lisbon, May 21, 2026 (Lusa) - The European Commission cut its growth forecasts for Portugal's economy to 1.7% in 2026 and 1.8% in 2027, mainly due to the winter storms and the conflict in Iran, according to projections released on Thursday.

"Portugal's economy faced a series of unexpected shocks at the beginning of 2026, starting with severe storms in January and February, followed by a sharp rise in energy prices in March and April," the spring economic forecasts report said.

The document noted that economic sentiment deteriorated and gross domestic product (GDP) growth slowed from 0.9% quarter-on-quarter in the fourth quarter of 2025 to stagnation in the first quarter of 2026.

The commission forecasted that economic growth would slow from 1.9% in 2025 to 1.7% in 2026 and 1.8% in 2027.

This revised down the 2.2% and 2.1% growth it estimated in November 2025.

These forecasts are more pessimistic than the government's, which also revised its 2026 estimates to 2% growth, according to the 2026 Annual Progress Report the government submitted to Brussels in April.

"Repair works following storm damage and the expected peak use of RRP (Portugal's EU-funded Recovery and Resilience Plan) funds in 2026 will drive a gradual quarterly improvement in economic growth over the forecast horizon," Brussels acknowledged, although it expected high energy prices to continue harming the economy, particularly in the second quarter of 2026.

Investments should "benefit substantially from the RRP cycle in 2026, partially offsetting negative private sector investor sentiment," while the commission expected EU structural funds to recover and business sentiment to improve in 2027.

MES/LYT // ADB

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