Portugal’s Growth Forecast Cut by OECD Amid Middle East Conflict

The Organisation for Economic Co‑operation and Development (OECD) lowered its 2026 growth forecast for Portugal by almost one‑fifth, now projecting 1.8% GDP growth compared with its previous 2.2% estimate. The government led by Luís Montenegro still expects 2% growth, while other forecasters range from 1.6% to 1.9%. The OECD said the downgrade reflects the impact of the Middle‑East conflict, which has heightened energy prices and inflationary pressures worldwide.

In a separate address, Portuguese officials called for a new industrial policy to turn the current crisis into an opportunity. They urged simplification of licensing for industrial transformations, greater public investment in research and development, and leveraging defence spending to fund innovation. The speech highlighted the need to reduce bureaucratic barriers, improve competitiveness, and align the automotive and defense sectors to boost productivity.

Both messages underscore Portugal’s effort to navigate slowing economic momentum while seeking structural reforms and strategic investment to sustain growth.