Portuguese firms see modest H2 upturn as bureaucracy stays top brake

What Portugal's July AEP Business Survey Found

Portuguese companies are entering the second half of 2026 expecting a modest improvement, but the recovery is being held back by a familiar obstacle: red tape. A July survey of 400 entrepreneurs and managers by AEP – Associação Empresarial de Portugal found that 84.2% identify bureaucracy as a constraint on activity, ahead of energy costs at 82.1%, geopolitical tensions at 79.5%, non-energy raw material costs at 75% and transport prices at 73%.

Taxation affects activity for 65.8% of respondents, while international competition and labour shortages are each cited by 57.9%. Financing is the least-mentioned problem at 28.6%. The sample is strongly internationalised: 46% both export and import, 28% only export, 10% only import, and just 16% have no cross-border activity. It includes 39% medium-sized, 33% small, 23% micro and 5% large firms.

Expectations are cautiously positive. On the domestic market, 53.9% expect higher turnover in the second half, with 51.3% describing the rise as slight and only 2.6% as significant. The share expecting a decline falls from 25.7% to 20.5%. Internationally, 30.8% expect sales growth, up from 25.7% that achieved growth in the first half, but 28.2% still anticipate a fall. AEP president Luís Miguel Ribeiro described the outlook as a slight recovery and urged a prudent reading after a difficult first half shaped by extreme weather, international instability and the effects of the Strait of Hormuz closure.

Why Bureaucracy Outranks Energy and Geopolitics for Portuguese Firms

Why bureaucracy tops a list dominated by cost and geopolitical shocks

The fact that 84.2% of firms name bureaucracy as a constraint — more than energy, raw materials or geopolitics — matters because it is the one obstacle businesses believe is directly within national policy control. While global cost and conflict shocks must be absorbed, excessive procedures, slow public bodies and overlapping legislation add a domestic layer of friction that firms cannot hedge externally. The AEP findings reinforce this reading: when asked what would help, respondents put eliminating bureaucracy first, followed by a better justice system and simpler laws.

Taxation forms part of the same domestic drag. Some 65.8% say the tax burden is affecting activity, and companies call for fiscal simplification and lower corporate taxes alongside digitalisation of customs processes.

A domestic upturn with a much more cautious export picture

The expectation gap between domestic and foreign markets is striking. On the home market, a majority expect growth and the share predicting contraction has fallen. In exports, the improvement is smaller: 30.8% expect growth, while 28.2% still expect a decline. That fits with concerns about geopolitical fragmentation, customs barriers and the effects of the Strait of Hormuz disruption, which hit internationally exposed firms harder. With 84% of the sample involved in importing or exporting, export caution feeds directly into national growth prospects.

What AEP president Luís Miguel Ribeiro is signalling

Ribeiro frames the results as evidence of resilience rather than a turning point. He explicitly describes the recovery as slight and says businesses have partly absorbed extremely adverse internal and external impacts. That suggests the second-half improvement is likely to be incremental and uneven, not a strong rebound, and that policy action on red tape and fiscal complexity may matter more than waiting for external conditions to improve.

What Exporters and Policymakers Should Do With the AEP Findings

The survey points to specific priorities for two distinct audiences: corporate decision-makers and Portuguese policymakers.

• For export-heavy firms: 84% of surveyed companies import or export, and international expectations are the weakest part of the outlook. Treat the 30.8% expected exporter growth and 28.2% expected decline as a signal to advance the measures firms themselves propose: bilateral and regional trade agreements, market diversification, and multimodal logistics rather than dependence on a single route.
• For domestic-focused companies: 53.9% expect domestic sales growth, but only 2.6% expect a significant rise and 51.3% expect a slight one. International competition and labour shortages are each constraints for 57.9%, so hiring and pricing plans should assume a gradual demand improvement, not a sharp upturn.
• For policymakers and regulators: the 84.2% bureaucracy figure and 65.8% tax burden figure identify the highest-leverage domestic reforms. The survey's own priority list — cutting red tape, faster justice, simpler laws, fiscal simplification and customs digitalisation — is the concrete agenda firms are asking for.
• For business associations and trade bodies: respondents want more structured dialogue with regulators and institutions, and stable strategic partnerships, especially to respond to future supply-chain and geopolitical disruptions.