Staff from the Commission, in liaison with staff from the European Central Bank, visited Lisbon from 28 November to 6 December to conduct the seventh post-programme surveillance (PPS) review for Portugal. Economic activity has accelerated and become more broad-based, with a pick-up in investment and exports alongside continued growth in consumption and employment. Indeed, the current favourable macroeconomic and financial conditions provide an opportunity to address Portugal’s persistent macroeconomic imbalances, particularly elevated public and private sector debt and rigidities in the economy. These weigh on medium-term potential growth and leave the country vulnerable to shocks. The recovery of the Portuguese banking sector continues, but banks remain vulnerable due to a high level of non-performing loans, weak profitability and thin capital buffers. Addressing impediments to investment – such as the relatively low skill level of the Portuguese labour force – and further improving the business environment will be key for strengthening potential growth.