S&P Upgrades Portugal Sovereign Credit Rating to A+ Stable Outlook

Standard & Poor's (S&P) upgraded Portugal's sovereign credit rating to A+ with a stable outlook, reflecting confidence in the country's fiscal discipline and economic performance despite a fragmented parliament and rising defense spending. The agency forecasts a small budget surplus in 2025, followed by deficits in 2026 due to increased capital investment and social expenditures, while expecting public debt to decline to around 84 percent of GDP by 2028. Portugal's economy is projected to slow slightly in 2025 but rebound in 2026, supported by investments linked to the EU's Recovery and Resilience Plan and a resilient tourism sector that mitigates the impact of trade tensions and tariffs from the EU-U.S. trade deal. S&P highlighted Portugal's improving external financial deleveraging and moderate economic growth despite global uncertainties, with recent government investments aimed at modernizing infrastructure like ports. The Portuguese Finance Ministry welcomed the upgrade, reaffirming its commitment to structural reforms, fiscal responsibility, and steady debt reduction. Overall, the rating upgrade underscores optimism about Portugal's fiscal trajectory and economic resilience amid external challenges.