Lisbon, Sept. 17, 2024 (Lusa) - Portugal last year fell one place in the attractiveness ranking of European countries in terms of foreign direct investment (FDI), to seventh, according to the EY Attractiveness Survey Portugal, released on Tuesday.
According to the study by the management consultancy EY, "after three years of continuous growth, the post-pandemic recovery of Foreign Direct Investment (FDI), in 2023 Portugal lost attraction in this chapter and welcomed 221 FDI projects, 11% less than in 2022, in line with the decrease recorded across Europe."
As a result, the document continues, "Portugal now occupies 7th place in the “ranking” of attractiveness (...) of European countries for FDI (in 2022 it was 6th)."
According to the study, "this result was strongly influenced by slow economic growth, persistently high inflation, high energy prices and national political instability."
Portugal fell to seventh as it was overtaken by Poland, which in 2023 won more investment from the United States, the study notes.
The EY Attractiveness Survey Portugal assesses foreign investors' perception of the country's attractiveness as an FDI destination, which is defined in this analysis as a combination of image, investor confidence and perception of a country or region's ability to offer the most competitive benefits for FDI, the document states.
"The panel of participants in the EY Attractiveness Survey Portugal is made up of decision-makers from all backgrounds, based on their opinions and experiences of Europe: Western Europe (54%), North America (19%), Northern Europe (17%), Asia (7%) and Brazil (3%)," with 63% of the 200 investors surveyed having operations in Portugal, says EY.
The area of software & IT services continues to lead FDI projects, "in a sign of the attractiveness of the digital economy for Portugal, which between 2021 and 2023 was the 4th European country to attract the largest number of FDI projects (244) in this field."
Another of the study's conclusions is that business services and professional services, "whose growth more than quadrupled compared to 2022, are at the forefront of FDI in Portugal."
Overall, according to the survey, the country "remains attractive for FDI, with 84% of the investors surveyed saying they have plans to establish or expand operations in the country in 2025, an indicator above the European average of 72%."
Around 77% of those surveyed "anticipate Portugal's attractiveness for FDI to improve over the next three years, a much higher figure than the 49% recorded in 2021," the study also points out.
"Despite the reduction in the number of FDI projects in 2023, Portugal continues to establish itself as a stable and very attractive investment destination," the study quotes Miguel Farinha, country manager partner of the EY Portuguese cluster, as saying. "The fact that it remains in the Top 10 of European countries most trusted by foreign investors is a clear sign of the country's progressive growth, which stands out internationally for the qualifications of its workforce and for being at the forefront of innovation, technological development and environmental sustainability."
The US, France and Germany are the three countries whose businesses invest the most in Portugal.
"These countries account for more than 40% of FDI projects in Portugal, with the software & IT services sector accounting for the majority of investment, with 40 projects coming from these countries," the study says.
It points out that the "weight of European countries in FDI in Portugal has decreased significantly, contrary to the past trend in which the main investors were from the same continent."
While in 2022 investment from EU countries accounted for 73.4% of total FDI projects, last year "it accounted for just over half of the total."
Brazil, meanwhile, was responsible for "almost 7% of this investment in 2023 and is now one of the top six countries of origin of FDI projects in Portugal, establishing the fact that, in relative terms, Portugal attracts much more Brazilian investment than [does] Europe," says the study.
It emphasises that "the strong European economies, namely France and Spain, are responsible for higher FDI from Brazil [than] in Portugal."
Conversely, "China accounts for 4.5% of investment in Europe, but only 0.5% in Portugal, indicating that Portugal's attractiveness has not yet been fully recognised by Chinese investors."
ALU/ARO // ARO.
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