Portugal Still Leads Iberia in Global Development Rankings—But for How Long?

Portugal’s competitive glow remains visible—yet it is starting to flicker. A fresh reading of the IMD World Competitiveness Ranking, released in partnership with Porto Business School, still places the country ahead of Spain and Italy, but a one-step slide to 37th overall underscores how quickly others are catching up. For foreigners already here—or eyeing a move—this mixed picture signals solid public services and infrastructure, tempered by stubborn hurdles inside courtrooms, tax offices and corporate training rooms.

The scoreboard foreigners watch

Founded in Switzerland, the IMD index compares 69 economies across four broad pillars: economic performance, business efficiency, government efficiency and infrastructure. The league table is closely tracked by multinationals planning relocations and by expats gauging the ease of doing business. This year Switzerland, Singapore and Hong Kong occupy the podium; Portugal sits 37th, Spain 39th and Italy 43rd.

Where Portugal still beats its Iberian neighbour

The country’s strongest card is hard infrastructure. Ports, roads and fibre-optic networks push Portugal to 25th place in that category—its best showing since before the pandemic. Basic utilities climbed sharply (16th versus 33rd a year ago), scientific facilities nudged up to 26th and the public-school system holds a healthy 21st. Demographics provide a surprising boost: population growth and secondary-school enrolment rank a remarkable 2nd worldwide, offering a pipeline of young talent for companies from Braga to Faro.

A nudge from the public sector

On government efficiency Portugal leapfrogged six positions to 35th. Credit goes to tighter public finances, small tweaks to tax policy and a faster-moving institutional framework. International investors polled by IMD again awarded Portugal top marks for electoral legitimacy and political stability—reassuring factors for anyone relocating family or capital.

The nagging pain points

Two pillars spoiled the party. In business efficiency Portugal fell to 42nd. Productivity slipped, stock-market depth remains thin and firms complain of patchy in-house training. Brain drain and talent retention each languish in 61st. Meanwhile, economic performance joined the downward drift, also at 42nd, dragged by a cooling domestic economy and youth unemployment near the bottom of the table. Real GDP per capita is stuck around the position 60 , a reminder that headline growth has not yet translated into broader wealth.

What this means for foreign residents and investors

If you run a start-up in Porto’s tech district or manage a back-office in Lisbon, the message is double-edged. You will plug into a reliable grid, smooth logistics and an increasingly responsive public sector. But you may battle a tight labour market and face steep personal taxes. Companies citing Portugal’s appeal highlight skilled labour (80 percent agreement) and reasonable operating costs (64 percent), yet rate fiscal policy the least attractive factor (barely 3 percent).

Policy signals worth tracking

A five-point reform agenda accompanies the report. Priorities include diversifying the economy beyond tourism, accelerating green and digital skills, overhauling public services—especially health, justice and education—reversing the demographic slide through pro-birth and pro-immigration policies, and modernising insolvency law to help firms restructure rather than fold. Success on these fronts could push Portugal back into the global top-30 and cement its status as the Iberian safe haven for international talent.

Final thought

For now, Portugal continues to edge out its larger neighbours, offering a stable setting with enviable quality of life. Yet the gap is narrowing. Anyone betting on a long-term move should weigh today’s solid fundamentals against the unresolved friction points—and watch whether policymakers can turn this year’s gentle warning into next year’s rebound.