The well-being index in Portugal increased at an average 2.7% per year between 1995 and 2022, according to economists from the banking regulator, moving more in line with the EU.

The well-being index evaluates increased consumption, leisure opportunities, life expectancy, and reduced inequality. It enables the incorporation of factors beyond GDP per capita analysis, aiming to prevent a narrow focus on merely boosting national income in shaping public policies.

In Portugal, the average growth in well-being was mirrored by rises in both per capita consumption and average life expectancy, each contributing 1.3 percentage points. Additionally, there was a slight decline in inequality, while there were no changes in leisure opportunities, The Portugal News reports.

The Bank of Portugal's (BdP) conclusion regarding Portugal's convergence with the EU in terms of well-being differs from the findings based on GDP per capita analysis.

While there has been no evident progress in aligning with EU values between 1995 and 2022 when solely considering GDP per capita, the assessment based on well-being presents a contrasting view.

The central bank's report states that "in Portugal, the deviation between the average growth of the two measures was 1.5 percentage points --- the third largest among EU countries."

In 2022, the well-being index in Portugal stood at 87%. This implies that consumption in the EU would need to fall by 13% for a citizen living in Portugal to feel indifferent between living in Portugal or in an economy with the average characteristics of the EU.

The report continues: "All factors, with the exception of average life expectancy --- higher in Portugal ---, contribute to the lower standard of living compared to the EU."

Furthermore, Portugal has risen from 20th place in the ranking based on GDP per capita up to 16th using the well-being gauge.

"The greater weight of consumption in GDP in Portugal and the greater average life expectancy enhance this result, more than offsetting the negative effect of inequality and higher hours worked than in the EU," the bank's report adds.