This decline comes despite an improvement in the country’s economic performance, underscoring ongoing weaknesses in several of the structural areas considered essential for long-term competitiveness.

The 2026 ranking is led by Singapore, which retains its position at the top of the table.

Criteria by category

Portugal’s strongest result remains in infrastructure, where it ranks 31st globally, but even this category recorded a six-place drop compared with 2025.

However, the country continued to perform relatively well in education, where it placed 23rd, and in technological infrastructure, ranking 25th.

The most notable improvement was recorded in the “Economic Performance” pillar, climbing seven places to 35th, largely driven by reinforced international investment indicators, with the country rising from 33rd to 21st position in that category. A modest improvement in domestic economic conditions also contributed to the gain.

Policy efficiency

Portugal’s position in “Business Efficiency” deteriorated from 42nd to 45th, reflecting weaker scores across a range of measures, including management practices, labour market performance, productivity, entrepreneurship, the scale of small and medium-sized enterprises, workforce training, and financial skills.

A sharper decline was recorded in “Government Efficiency”, slipping from 35th to 41st place, while Fiscal policy was one of the few areas to register a slight improvement, but this was insufficient to offset broader weaknesses across the category.

Tourism revenues

Despite this overall fall in the rankings, Portugal continues to stand out in several individual indicators.

The country ranks fourth worldwide for tourism revenues, 11th for foreign direct investment inflows as a percentage of GDP, and 12th for low levels of youth exclusion.

It also holds third place globally for having one of the lowest concentrations of exports by product, reflecting a relatively diversified export base.

According to business leaders surveyed by the IMD, a skilled workforce was identified as Portugal’s most attractive feature, cited by 72 percent of respondents.

The competitive costs were highlighted by 68 percent, as 62 percent pointed to a reliable infrastructure, while open and positive attitudes were mentioned by 60 percent, and 40 percent regarded policy stability as a main advantage.

The latest findings suggest that while Portugal continues to benefit from investment inflows and a strong tourism sector, persistent challenges in governance, productivity and business performance are weighing on its international competitiveness.