LISBON, Aug. 29 (Xinhua) — U.S.-based rating agency Standard & Poor’s (S&P) on Friday upgraded Portugal’s sovereign credit rating to A+ with a stable outlook. This follows the agency’s February 28 decision to raise the rating from A- to A with a positive outlook, paving the way for another upward revision.
In its statement, S&P expressed confidence that the Portuguese government will be able to implement policies in a relatively smooth manner, maintaining fiscal discipline despite a fragmented parliament. Even with higher defense spending, the agency expects public debt to continue declining, albeit at a slower pace, reaching around 84 percent of GDP by 2028.
For 2025, S&P forecasts a small budget surplus of 0.2 percent of GDP, but projects a return to deficits in 2026 as capital investment accelerates and social as well as defense expenditures rise.
Amid ongoing trade tensions, S&P noted that Portugal is largely shielded from the direct impact of the Washington-Brussels deal, since only about 7 percent of its goods exports go to the U.S.. The sectors most exposed to U.S. tariffs are textiles, auto parts and wine, but the negative effects are expected to be partly offset by the strong performance of Portugal’s tourism industry.
The agency expects GDP growth to slow to 1.7 percent in 2025, down from 1.9 percent in 2024, before rebounding to 2.2 percent in 2026, supported by investments linked to the EU’s Recovery and Resilience Plan (PRR). However, S&P cautioned that tighter immigration policies could weigh on long-term labor supply.
Reacting to the upgrade, the Finance Ministry wrote on its official X account that the decision “reflects confidence in Portugal’s fiscal and economic performance and the soundness of its fiscal policy.”
According to Lusa News Agency, the ministry added that the government remains committed to structural reforms and economic growth, while maintaining fiscal responsibility and steadily reducing debt. It reaffirmed confidence in achieving a 0.3 percent of GDP budget surplus this year.
