The results of the 2025 International Competitiveness Ranking, published by the Institute for Management Development (IMD), are not surprising. Portugal dropped one position, now ranking 37th out of 69 countries. The decline is slight, just one position compared to the previous year, but it reveals a trend and confirms the main obstacles to the country’s competitiveness.
Fiscal Policy, Domestic Economy, Productivity and Efficiency, Management Practices, Financial Efficiency and Labor are the areas in which Portugal presents the greatest vulnerabilities, pulling the country to the lower places in the ranking (between 43rd and 56th position in these areas). On the contrary, Portugal obtains very flattering results in parameters such as Basic Infrastructure, Education and International Trade, with rankings between 16th and 22nd place.
It follows that we have a competent educational system, good infrastructure and some dynamism in exports and internationalization. This is still an interesting basis for strengthening international competitiveness, as long as there is the capacity to retain the talent trained at the Academy, on the one hand, and that companies are able to properly monetize the country’s infrastructural quality and enter foreign markets with products with high added value, on the other.
All of this is not helped by the weaknesses we exhibit in critical factors to boost investment. First of all, the tax system remains cumbersome, complex and opaque. One of the ways for Portugal to differentiate itself in the global economy and surpass its competitors is, precisely, through taxation. Fiscal competitiveness is a powerful tool to stimulate private initiative and attract investment, talent, capital and innovation. We therefore need a tax system that is fair, simple, transparent and stable.
The country also needs to tackle the chronic problem of productivity, which is aggravated by technological backwardness, management and capital deficits, lack of efficiency and the scarcity and low qualification of labor. This set of problems naturally requires an integrated strategy, which combines investment in training and skills with the acceleration of the digital transition. The desirable increase in productivity inevitably involves more qualified resources and greater talent attraction, but also through new management models and practices. It is true that, without a deep digitalization of companies’ activities and processes, consistent growth in the country’s productive capacity is not expected.
Strengthening international competitiveness therefore requires a joint effort by the State and the private sector. Firstly, structural reforms are required – particularly in terms of taxation and the business environment – that simplify the functioning of the economy, unlock investment and promote innovation. The second requires greater investment in skills and technology, so that the gains in productivity, management and efficiency that the digital transition entails can be achieved. Without this joint effort, Portugal will continue to destroy the solid foundation it has built for its development and fail to materialize the growth potential of its economy.
President of CIP – Portuguese Business Confederation