Portugal 25 Years with the Euro: Growth, Tourism, and Lessons Learned

Portugal has been recognized as the fastest-growing economy in 2025, according to The Economist. While this performance cannot be solely attributed to the euro, the single currency has played a notable role over the nearly 25 years since its adoption. Despite the positive ranking, recent national strikes demonstrated that public dissatisfaction over income and employment persists, though these protests targeted government policies rather than the euro itself.

Tourism stands out as the sector where the impact of the euro is most visible. Contributing roughly 20 percent of Portugal’s GDP, tourism has doubled in the past two decades, and despite the temporary disruption caused by COVID-19, it is recovering rapidly. Last year, tourism revenues approached €30 billion. For visitors from eurozone countries, paying in euros removes the need for currency exchange, simplifying travel decisions. Spanish tourists Veronica and her husband noted that using euros abroad makes travel easier, while Portugal’s Deputy Finance Minister José Maria Brandão de Brito said the euro encourages short-term tourism by reducing the costs and inconveniences of exchanging currencies. Jorge Pais, vice-president of the Association of Portuguese Industrialists, added that the euro helps foreign operators and hotel chains assess investment opportunities more transparently.

Concerns about price increases during the euro’s introduction were widespread, particularly among older citizens, though inflation in the first year rose by just 3.6 percent, of which the euro itself accounted for only around 1 percent. Early proponents of the single currency, including Finance Minister Jorge Braga de Macedo in 2002 and Jacques Delors, emphasized that a unified European market is closely linked to a unified currency, arguing that retaining a separate currency while participating fully in the European market would be counterproductive.

Economic growth after the euro’s introduction brought new challenges. Municipalities in some cities struggled to meet housing demand, leading to rising property prices, while the labor market increasingly relied on foreign workers, with roughly 1.5 million immigrants arriving over four years in a country of 10 million. Antonio de Sousa, then governor of Portugal’s central bank, highlighted the importance of managing debt and public spending. Low borrowing costs initially encouraged excessive government debt, but the 2008 financial crisis prompted fiscal discipline through tax increases and spending cuts. In recent years, Portugal has even achieved budget surpluses, demonstrating more cautious financial management.

While the escudo is no longer used for transactions, it has not disappeared from Portuguese culture. Old coins have been repurposed into jewelry, attracting both locals and tourists. Jeweler Maria Carolina began crafting rings from her grandparents’ escudo coins, noting that while daily life now revolves around euros, the coins serve as nostalgic souvenirs and a reminder of earlier times. Rising food prices and global economic factors continue to shape life in Portugal, but these challenges are not attributed to the euro itself.

The experience of Portugal illustrates that the euro has facilitated economic integration, tourism growth, and financial stability while presenting new considerations for housing, labor, and fiscal management. Over 25 years, the currency has become an integral part of Portuguese life, influencing both the economy and everyday transactions, even as citizens and policymakers navigate ongoing economic challenges.