Staff from the European Commission, in liaison with staff from the European Central Bank, visited Lisbon from 5 to 12 June to conduct the eighth post-programme surveillance (PPS) review for Portugal. Staff from the European Stability Mechanism participated in the meetings on aspects related to its Early Warning System. Following strong growth of 2.7% in 2017, the economic expansion is expected to moderate somewhat to rates broadly in line with that of the euro area. The current favourable macroeconomic and financial conditions provide an opportunity to accelerate structural reforms, further reduce macroeconomic imbalances and increase Portugal’s resilience to shocks. Elevated public and private sector debt, however, weigh on growth and leave the economy vulnerable to adverse shocks and to a turn in the business cycle. Further fiscal consolidation will be important for ensuring a steady decline in the still very high public debt level, while Portuguese banks need to address remaining vulnerabilities. Addressing impediments to investment, increasing productivity and further improving the business environment remain key for strengthening potential growth.