Porto Business School releases Portugal’s national results in exclusive partnership with IMD. The economy is improving, but the country is losing ground where competitiveness is truly decided: execution, institutions, and business efficiency.
Portugal has dropped three positions in the IMD World Competitiveness Ranking 2026 and now ranks 40th among 70 economies. The decline comes despite a strong improvement in Economic Performance, where the country rose seven places to 35th.
The contrast is clear: Portugal is improving economically, yet losing competitiveness. The issue is not a lack of assets, but the country’s ability to convert them into productivity, innovation, scale, and consistent execution.
Portugal continues to offer important competitive strengths, including qualified talent, openness to the world, the ability to attract investment, quality of life, and reliable basic infrastructure. However, these assets are not yet translating consistently into structural gains in competitiveness.
Among Portugal’s strongest economic indicators, the country ranks 4th worldwide in Tourism Receipts, 11th in Foreign Direct Investment Flows as a percentage of GDP, 12th in low levels of youth exclusion, and 3rd in the lowest concentration of exports by product.
Still, the momentum of the economy was not enough to prevent a decline in the pillars that sustain long-term competitiveness: Government Efficiency, where Portugal ranks 41st; Business Efficiency, where it ranks 45th; and Infrastructure, where it stands in 31st place.
Institutions and companies at the center of Portugal’s competitiveness challenge
In Government Efficiency, the predictability of the institutional, fiscal, and regulatory framework continues to influence investment, growth, and scaling decisions. Fiscal policy, public finances, and business legislation are among the main challenges, calling for simpler, more stable, and more execution-oriented public policies.
Business Efficiency is Portugal’s weakest pillar, with the country ranking 45th. In this area, Portugal lost ground compared with 2025, affected by management practices, labor market performance, and productivity.
These weaknesses are compounded by persistent challenges in entrepreneurship, SME scale, employee training, and companies’ financial skills. The message is clear: without more agile institutions and stronger companies, economic gains will struggle to become lasting competitiveness.
Talent remains Portugal’s strongest attraction factor
Despite the fall in the ranking, talent remains one of Portugal’s main competitive assets. In IMD’s Executive Opinion Survey, qualified labor is identified as the country’s leading attractiveness factor, cited by 72% of respondents.
It is followed by cost competitiveness, at 68%; reliable infrastructure, at 62%; open and positive attitudes, at 60%; and policy stability and predictability, at 40%.
The coming years will require structural decisions: diversifying the productive base and export markets, strengthening management and training capabilities, aligning skills with the digital and green transitions, accelerating the energy transition, responding to demographic pressures, and, above all, executing reforms with impact.
Resilient economies lead the ranking
At the top of the IMD World Competitiveness Ranking 2026, the results confirm a broader trend: the most competitive economies are those that combine credible institutions, adaptability, and resilience in the face of external shocks.
Singapore regains the global lead, followed by Hong Kong, Switzerland, Taiwan, and the United Arab Emirates. The top 10 also includes Denmark, Ireland, the Netherlands, Sweden, and the United States, which returns to the group of the world’s ten most competitive economies after ranking 13th in 2025.
“Geopolitical conditions are deteriorating and global fragmentation is increasing. Countries with credible and tested institutions gain an advantage in this context because, as the international system no longer responds to many national needs, companies can continue to operate with predictability,” says Arturo Bris, Director of the IMD World Competitiveness Center.
For José Esteves, Dean of Porto Business School, the challenge is clear and urgent:
“Portugal has excellent professionals, attracts investment, and is an economy open to the world. But the competitiveness of the future is not measured by the assets we have. It is measured by how we transform them into productivity, innovation, scale, and impact. We need more agile companies, more effective institutions, and leaders prepared to execute better, adapt faster, and create value sustainably.”
Porto Business School strengthens its commitment to competitiveness
Porto Business School embraces this mission through the Center for Entrepreneurship, Growth & Competitiveness, part of the Innovation X Hub. The Center acts as a meeting point for entrepreneurs, investors, companies, and institutions, with the goal of strengthening management capabilities, supporting business growth, and boosting competitiveness in the strategic sectors of the next decade.
In a context where competitiveness increasingly depends on adaptability, applied innovation, and execution, Porto Business School is committed to developing leaders capable of turning knowledge into economic impact, accelerating value creation in organizations, and strengthening the competitive capacity of Portugal’s business ecosystem.
About the IMD World Competitiveness Ranking
The IMD World Competitiveness Ranking assesses, every year, the ability of economies to create an environment that supports business competitiveness. The 2026 edition analyzes 70 economies and combines statistical data with the Executive Opinion Survey across four dimensions: Economic Performance, Government Efficiency, Business Efficiency, and Infrastructure.
Porto Business School is IMD’s exclusive partner in Portugal for the collection, analysis, and dissemination of the national results.