Portugal surplus slips as imports soar

Portugal’s much-vaunted capacity to earn more abroad than it spends has lost some steam. Between January and August 2025, the country still posted an external surplus of €5.658 billion (about €5.7 billion), but that cushion is 21.7% thinner than a year ago, according to fresh figures from the Banco de Portugal. The headline number remains the second-largest nominal surplus on record, yet the slowdown raises questions for households and businesses planning for 2026.

Why the surplus shrank despite a tourism boom

A glance at the aggregate hides the mechanics underneath. The external surplus, which merges the balança corrente and the balança de capital, swung lower chiefly because the country’s appetite for imported goods is running ahead of its ability to sell merchandise abroad. Higher energy costs, a rebound in car purchases and heavier orders of industrial machinery all helped widen the trade gap. On the positive side, the tourism windfall, fuelled by a record 13.9 M hotel guests through August, allowed the services balance to expand by roughly €1.2 B. Still, that stellar summer could not fully offset the €3 B deterioration on the goods side, leaving the overall net position weaker.

Goods trade deficit widens as imports outrun exports

The root cause of the squeeze is the balança de bens, where the deficit ballooned to an estimated €17.4 B in the first eight months. Imports jumped €2.4 B, led by refined fuels and consumer electronics, while merchandise exports slipped €600 M amid softer demand from Germany and France. Portuguese producers, especially in textiles, footwear, and auto parts, cite a double blow: weaker orders from the euro area and fiercer price competition from Asia. The stronger euro versus several emerging-market currencies since spring has also shaved margins, making foreign sales less lucrative in nominal euro terms.

Services still shine: tourists cushion the blow

If the trade in goods is a drag, the trade in services remains a powerhouse. Revenue from travel and tourism surged to an all-time high of €15.1 B by August, reflecting longer stays by North American visitors and resurgent Brazilian demand. The net services surplus—covering everything from software royalties to shipping fees—widened by nearly €1.2 B year-on-year. Hoteliers along the Algarve report occupancy above 80% even in shoulder months, while Porto’s airport processed 18% more passengers than in 2024. This influx is propping up retail sales, restaurant takings and short-term rentals, cushioning regions that are less exposed to industrial headwinds.

Europe-wide slowdown and what it means for Portugal

Portugal’s external position rarely moves in isolation. The euro-zone growth downgrade to 0.9% for 2025, coupled with trade tensions and cooling Chinese demand, has trimmed export prospects across the bloc. For Lisbon, weaker continental activity not only curbs goods shipments but also threatens remittance flows from Portuguese workers abroad, a line that still injects more than €3 B annually into the current account. Analysts at BPI Research warn that even a modest rise in oil prices over winter could slice another 0.3 percentage points off the surplus-to-GDP ratio, currently hovering near 1.6%.

How does Portugal stack up against neighbours?

A regional comparison underscores why policymakers are not panicking yet. Spain enjoys a larger nominal surplus—about €14.7 B in Q2—but its ratio to GDP is similar to Portugal’s. Ireland leads the pack with a hefty 4.1% of GDP surplus, thanks to multinational profits. Greece, by contrast, carries a –5.7% deficit, reminding observers that Portugal’s footing is relatively sound. Economists at Eurostat highlight that Portugal’s services edge, especially IT outsourcing and tourism, gives it more resilience than goods-heavy peers when global trade cools.

What to watch in the final quarter

Looking ahead, the Finance Ministry’s draft budget banks on a 1.8% current-account surplus for 2025 as a whole, whereas the Banco de Portugal is more upbeat at 3.6%. September’s flash data suggest the surplus held roughly steady at €1.551 B, but October figures remain under wraps. Key swing factors include energy import bills, the trajectory of euro interest rates, and the pace at which EU recovery funds land on public-sector balance sheets. A pickup in machinery exports to the United States, buoyed by a weaker euro-dollar rate since early autumn, could provide a late-year lift.

Expert viewpoints: caution, optimism and policy tweaks

Fiscal hawks at the Conselho das Finanças Públicas argue that the narrowing surplus should prod companies to scale up non-European markets and press the government to streamline export bureaucracy. Tourism executives counter that the world craves Portugal’s mild climate, safety and gastronomy, predicting another double-digit rise in 2026 visitor receipts. Meanwhile, sustainable-growth advocates urge channelling EU funds into industrial decarbonisation, lowering fossil-fuel imports in the medium term. Whether the surplus rebounds or drifts lower will hinge on these policy choices as much as on external winds.