MARKET STATUS
ECONOMIC SITUATION - SEPTEMBER 2025
September brought new insights into the Portuguese and global economic situation, reinforcing existing trends and highlighting emerging challenges in international markets. In Portugal, a moderation in inflationary pressures is beginning to be noted: annual inflation fell to 2.4% in September (compared to 2.8% in August). This report provides some breathing room in terms of monetary policy and purchasing power, although the global outlook continues to exert pressure on the domestic economy. In terms of fiscal and external review, Portugal received another positive boost: Fitch upgraded the country's sovereign rating from "A-" to "A," highlighting its fiscal soundness, its path to reducing external debt, and the alignment of public accounts. This move reinforces the perception of the resilience of portuguese public finances at a time when many countries are facing deficits.
Regarding global activity, industrial indicators once again revealed difficulties: many Asian and European countries recorded contractions or reduced growth rates in the manufacturing sector, mainly due to weak demand in China and the US. In particular, China recorded its sixth consecutive month of industrial activity contraction, reflecting persistent tensions in the real estate sector and weak domestic demand.
In the US bond markets, Treasury yields showed some volatility but ended the period relatively stable. The yield curve steepened somewhat, with the 10-year yield hovering around 4.15%, while the 30-year yield remained close to 4.75%. Bond market behavior is relevant because it affects global financing costs and can put pressure on economies with high debt levels. In the US, there is still underlying concern about the risk of a government shutdown, which fuels market uncertainty and could delay the release of relevant economic data.
In Europe, growth remains modest and uneven across member states. The European Commission supports the urgent need for initiatives that revitalize collective investment and promote innovation and competitiveness, especially at a time when the shortage of skilled labor is worsening. António Costa's recent speech at the New Economy Forum reinforced the need for European cohesion to respond to common structural challenges.
Sources: INE, BdP, BPI Research, Eurostat, Yahoo Finance; ECB, Turismo de Portugal
DEVELOPED ACTIVITIES
i. Current Management
ii. Achievements
Conclusion of the project: VFX 47
VFX
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Capital 243.400€ | 26 Members
iii. Improvements and Evolutions
EVERYONE
COUNTS
FROM AGING TO SUSTAINABILITY: PORTUGAL'S DEMOGRAPHIC CHALLENGES
Portugal is facing a profound demographic transformation, marked by two simultaneous movements: a persistently low birth rate and a continuous increase in life expectancy. Never before have people lived so long or in such good health, but this achievement coexists with a fertility rate (which measures the average number of children per woman of childbearing age) that has remained well below the generational renewal rate for decades. Today, Portuguese women have an average of just over 1.4 children, when 2.1 would be needed to balance population renewal. This reality translates into an accelerated aging of the population, evident in the fact that the median age is now over 47, and that for every 100 young people, there are almost 200 elderly people.
The consequences of this dynamic are profound. The working-age population (currently representing about 63% of the total) will decrease by almost half by 2050. The ratio of people of working age to retirees will fall from 2.5 to 1.6, meaning that the burden of financing pensions and social protection will fall on an increasingly smaller number of workers. At the same time, it will put pressure on the healthcare system and long-term care, jeopardizing the sustainability of public finances. The economic impact is no less significant. Recent projections indicate that the combination of fewer births and greater longevity could shave about 0.6 percentage points off Portugal's annual GDP growth by mid-century. This slowdown compromises not only the ability to create wealth but also the ability to maintain social cohesion. Against this backdrop, immigration has played a crucial role in preventing an even more rapid decline. In recent years, migratory flows have contributed decisively to preventing the decline of the Portuguese population. However, this mechanism, although indispensable, is not sufficient on its own: It would be necessary to attract and integrate a much higher number of immigrants to compensate for the low birth rate.
Still, there are ways to mitigate the challenge. Policies supporting families can mitigate the decline in the birth rate, even if their effects are slow. Enhancing women's participation in the labor market, extending professional careers, and creating conditions that allow for active and productive aging are equally crucial. Furthermore, there is a need to rethink the pension system, stimulate private savings, and, above all, invest in productivity gains that offset the reduction in the workforce. Technology and innovation, particularly artificial intelligence, could play a central role here.
Portugal faces a true demographic crossroads. The population pyramid, once based on a large youth base, has narrowed to such an extent that it threatens future stability. But this is not inevitable. With strategic vision and the capacity for action, longevity can be transformed into an opportunity, strengthening intergenerational solidarity and ensuring a more balanced and sustainable society.
Nuno Santos, Asset Manager
MONTH'S
SCHEDULE
October 2025
