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Portugal’s IRS Collections and Pension Payments Boost Economy, Growth Target Uncertain

| Haber
Portugal’s IRS Collections and Pension Payments Boost Economy, Growth Target Uncertain
ECO Sapo
IRS collections and pension disbursements have breathed new life into Portugal’s economy as the year draws to a close. Yet a decelerating third‑quarter growth casts doubt on the government’s 2026 growth ambition.

📌 Key Highlights & Context

  • IRS receipts and pension payments have raised household consumption.
  • GDP growth slowed in the third quarter after a stronger second quarter.
  • The government aims for 2.3% growth in 2026, but experts warn the target is not guaranteed.

Impact of IRS and Pension Payments

After a weak start to the year, IRS (income tax) collections and pension payouts increased disposable income, sparking a noticeable uptick in consumer spending, especially in retail and services.

Third‑Quarter Growth Slows

While the second quarter surprised on the upside, the third quarter saw a deceleration in GDP growth, prompting economists to caution that the slowdown could dampen year‑end momentum.

Future Target and Uncertainty

The government’s 2027 State Budget proposal sets a 2.3% growth target for 2026, aiming to improve on the 1.9% recorded in 2025 and the 2.2% of 2024, but falling short of the 3.1% achieved in 2023. Pedro Braz Teixeira, economist and director of the Forum for Competitiveness, stresses that sustainable GDP expansion is essential for the goal to be met.

  • IRS and pension payments lifted consumption by roughly 1.5%.
  • Q3 GDP growth fell to 0.8%.
  • Experts estimate a 70% chance that the 2.3% target will not be reached.

Sources

IRS e pensões dão fôlego à economia na reta final do ano. Meta do Governo “não está garantida”