MARKET STATUS
ECONOMIC SITUATION - OCTOBER 2025
The Portuguese economy entered the last quarter of the year showing signs of stability, although still constrained by a volatile external environment. The Bank of Portugal's October Economic Bulletin projects growth of around 1.9% for 2025, supported by a resilient labor market and a gradual moderation of inflation, which should stabilize near 2% in the coming years. The trajectory of interest rates should also follow this trend: market expectations point to a progressive reduction, with the 3-month Euribor falling from 3.6% in 2024 to values close to 2.2% in 2025. However, these projections remain dependent on external factors, particularly international financial conditions and the evolution of global trade tensions. At the wage level, a moderate slowdown in the growth rate is expected, reflecting an attempt to maintain a balance between competitiveness, productivity, and price stability. Globally, the report highlights that Portugal remains exposed to global geopolitical and economic risks, but also demonstrates an increased capacity for adaptation on the part of national companies.
In the United States, the month was marked by two developments that could influence the global economy. On the one hand, the Federal Reserve maintained a cautious stance, with the benchmark interest rate set between 3.75% and 4.00%, in a strategy that seeks to balance the gradual cooling of the labor market with the persistence of residual inflationary pressures. Internal disagreements within the committee continue, but the consensus points to future rate cuts clearly depending on data evolution and not on political cycles. On the other hand (and much more immediately), the US government approved a significant reduction in tariffs applied to several imported products, in an explicit attempt to alleviate pressures on consumer prices and accelerate the convergence of inflation to the target. This decision represents a partial reversal of the protectionist orientation that had been marking US trade policy and could have significant effects on international trade, the cost of intermediate goods, and global production flows. Combining this measure with the current more lenient monetary cycle could generate some relief in financial markets, reducing financing costs and easing the inflationary pressure that had been imported through chain supply.
Internationally, the economic environment remains marked by uncertainty, in a scenario where trade and monetary policies have become more interdependent than at any other time in the last decade. The reduction in US tariffs comes at a time when several advanced economies are facing moderate growth and trying to preserve competitive margins in the face of Asian technological advances and the fragmentation of global value chains. Europe, in particular, continues to grapple with structural challenges in investment, productivity, and skilled labor shortages, factors that gain increased relevance when external dynamics change rapidly. Asia maintains a central role in the global economic reorganization, with China attempting to stabilize its real estate sector and recover industrial dynamism, although it still faces constraints in domestic demand and geopolitical tensions that limit the predictability of its performance.
In this context, Portugal enters the end of the year benefiting from some accumulated external credibility, controlled inflation, and a relatively stable economic environment, but remains dependent on what happens in the major economic blocs. Recent US decisions, both on the monetary and trade fronts, could redefine financing costs, investment flows, and inflationary pressures globally. The world economy, meanwhile, remains at a point of transition: it is trying to accommodate successive shocks while seeking a new balance between growth, stability, and geoeconomic security.
Sources: INE, BdP, BPI research, Eurostat, yahoo finance; ECB, OCDE, Eurostat, IMF, turismo de Portugal
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November 2025
