Montenegro says Portugal's economy is the envy of the world. We checked.

Earlier this week, Montenegro said Portugal's economy makes the EU green with envy. We've spent three months collecting the data. Let's check. It's Thursday, 18 June. Twenty-six degrees. Here's what you need to know.

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MONTENEGRO SAYS PORTUGAL'S ECONOMY MAKES THE EU GREEN WITH ENVY. HERE'S WHAT THE NUMBERS ACTUALLY SAY.

On Tuesday, Prime Minister Luís Montenegro told the country during a speech at the Aljustrel mine in Beja that Portugal's financial health "makes any economy in the European Union green with envy." It's a bold claim. This newsletter has been tracking the data since March. Here is where things stand.

What supports the claim. Portugal has posted three consecutive budget surpluses, a run no previous government has managed. Unemployment is under 6%. Tourism revenue hit €29.1 billion in 2025 according to government figures and broke a monthly record in March. Tens of thousands of young people bought homes with state support through IMT exemptions and guarantee schemes. The EU-Mercosur trade deal went live. The debt-to-GDP ratio is falling. Portugal was one of only five EU countries to lower the apparent cost of public debt this year.

What challenges it. The GDP growth forecast has been revised downward this year. Q1 was flat. Inflation is running at 3.3%, with energy up 13.1% and food still 36% above 2022 levels. House prices more than doubled in 157 regions since 2017. Lisbon is the least affordable city in Europe for renters. The Bank of Portugal warned of an "abrupt" house price correction. The DSTI was tightened to 45%. Euribor rates are rising. And the general strike cost up to €792 million.

What the surplus hides. A balanced budget is real and matters. But the surplus has been maintained partly by underspending on public services. AIMA processed over 760,000 appointments with inadequate staff. The SNS computer system crashed earlier this month. Over 60 tax offices closed in a single day. The police are losing more officers to retirement than they can replace. The infrastructure that makes an economy function is under strain, and the surplus doesn't capture that.

What the data on people says. One in three Portuguese falls below the poverty line when housing costs are included. The average Lisbon renter has €12 left after paying for a one-bedroom flat. Diesel has been expensive for months. Energy costs jumped 13.1%. The grocery basket is still 36% higher than 2022. Wages haven't kept pace with any of it. The economy looks strong from the top. It feels different from the middle.

The context Montenegro is right about. Compared to the bailout era, Portugal's position is transformed. Compared to Southern European peers, the fiscal discipline is genuinely impressive. Compared to the UK, France, or Germany, the deficit picture is better. The claim isn't baseless. It's incomplete.

Bottom line: Portugal's public finances are strong. The lived experience of people paying rent, buying groceries, and waiting for AIMA is not. Whether the economy "makes the EU green with envy" depends on which numbers you choose to read.

⚡ QUICK HITS

Portugal drew 1-1 with DR Congo last night in Houston. João Neves headed Portugal in front after six minutes from a Pedro Neto cross. It should have been comfortable from there. It wasn't. Yoane Wissa equalised with a header deep in first-half stoppage time. Match reports describe a João Cancelo overhead kick ruled out by VAR for offside in the second half. DR Congo, playing their first World Cup match in 52 years, deserved the point. Portugal need a result against Uzbekistan on Tuesday (June 23, 6pm Lisbon time).

A four-star hotel just opened inside a medieval castle in Marvão. Portugal Resident reported Monday that the Marvão Hotel Museu is now officially open inside the castle walls of one of the most dramatically sited villages in the Alto Alentejo. Guests sleep inside a medieval fortress overlooking the Spanish border. Marvão is a 2.5-hour drive from Lisbon. If you're looking for a summer weekend that isn't the Algarve, this is it.

Portuguese hotel room prices rose faster than almost any other European country. It was reported that Portugal registered one of the highest year-on-year increases in hotel room rates across Europe. Summer hasn't peaked yet. For anyone renting on Airbnb, working in hospitality, or bracing for the bill when family visits this summer, the numbers confirm what the booking page already told you.

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A quick note: Today's ad is from our network partner Intrepid Travel. If it catches your eye, consider giving it a click. Those clicks directly support The Lisbon Letter and help us keep delivering free daily news, recommendations, and local discoveries to our community every morning. It takes a second, and it goes a surprisingly long way. Thanks for being part of this.

🍽️ SPOT OF THE DAY

POIS CAFÉ (ALFAMA)

Halfway up the hill from the Sé Cathedral, on Rua de São João da Praça, there is a café that looks like someone's living room and operates on the principle that nobody should be rushed out of it.

Pois Café was opened in 2008 by its Austrian owners, who took one look at Lisbon's traditional café culture and decided what it needed was bookshelves, mismatched furniture, and a sofa you could fall asleep on without anyone minding. Eighteen years later, the shelves are still there, filled with novels and travel guides left by patrons over the years. Board games are stacked in a corner. Newspapers are scattered across tables. The stone arches of the old Alfama building have been whitewashed to let the light in. The result is a room that feels less like a café and more like the communal living room of a building where everyone gets along.

The menu is light, international, and built for lingering. Brunch runs under €10 and includes pastries, yogurt, muesli, and juice. The sandwiches are generous. The quiches rotate daily. The cakes lean Austrian (the strudel has a reputation). Soups, salads, and fresh juices round out the lunch menu. Everything is vegetarian-friendly and most of it is homemade.

The crowd is a mix of freelancers who've been coming for years, tourists who found the place on a walk through Alfama, and locals who treat it as an extension of their flat. On a Thursday afternoon, the room is quiet enough to read, work, or stare out the window at the cobblestones and pretend the rest of the city doesn't exist.

The honest notes: the space is small and gets busy on weekends (especially Saturday brunch). Service is relaxed, which means unhurried, which means don't come if you're in a rush. The WiFi works. The coffee is good. There’s a vibe.

→ Bookshelves, board games, and brunch in an Alfama living room. Find them here ←

Alfama, on Rua de São João da Praça, behind the Sé Cathedral.

Insider tip: Go on a week day at noon. The weekend crowd hasn't arrived. Order a coffee and a slice of whatever cake is on the counter. Pull a book off the shelf. Stay longer than you planned.

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See you tomorrow morning.