In a report on a monitoring mission following the end of Portugal's bailout in 2014, the IMF now predicts that gross domestic product will grow 2.5 percent this year, up from a forecast of 1.3 percent released in February.
"Portugal's near-term outlook has strengthened considerably, supported by a pick-up in investment and continued growth in exports, as recovery in the euro area has gained momentum," the IMF said.
"Portugal has also made commendable progress in addressing near-term risks." The lender said a key improvement was Portugal's reduction of its budget deficit, to 2.0 percent of GDP last year, the country's lowest since the 1970s.
Portugal's goal to cut the deficit further to 1.5 percent of GDP this year "is well within reach," the IMF said.
Portugal's growth improvement has been boosted by tourism, which is set to generate double-digit revenue growth for the fourth year running in 2017, helping a rebound in the construction sector, the IMF said.