This Survey is published on the responsibility of the Economic and Development Review Committee of the OECD, which is charged with the examination of the economic situation of member countries.

As in other OECD countries, the pandemic caused severe human suffering and triggered a deep recession. The economy has been recovering fast, supported by policies, but uncertainty on the outlook remains large.

The COVID-19 pandemic has raised multiple challenges for Portugal and exacerbated existing weaknesses. It triggered a major health crisis, reversed the strong recovery from the last downturn and caused the deepest post-war recession (). The economy recovered fast, supported by the policy response notably the provision of income support, measures facilitating credit expansion and supporting job retention (). In addition, Portugal has managed to have one of the highest vaccination rates worldwide, notably for older persons, who are almost fully vaccinated. However, virus mutations might complicate the containment of the virus and the authorities should keep encouraging its population to take vaccination boosters. Supportive economic policies must be maintained to prevent this crisis from leaving profound scars on the economy and the society.

Digital technologies can help Portugal to address economic challenges, including low productivity growth and to mitigate the negative impact of the COVID-19 crisis. Despite impressive progress over recent years, especially in the public sector, Portugal lags OECD best performing countries in the use of key digital technologies. Broad-based policies should aim at getting the most out of digitalisation, lifting capabilities and sharpening incentives to adopt new technologies, while limiting the rise in inequalities it might generate. While communication infrastructure is good overall, addressing connectivity bottlenecks, improving affordability, and increasing digital security is key for the digital transformation. Equipping citizens with the skills needed in a digital economy is a pre-requisite to ensure the benefits of digitalisation are widely shared. Investment in knowledge-based capital and ICT equipment needs to be supported in SMEs by developing expertise and diversifying financing sources, while further reducing regulatory and administrative barriers to business growth.