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Portugal enters the top 10 of the most attractive for foreign investment

Portugal enters the top 10 of the most attractive for foreign investment
ECO Economia Online · 18 Jun 2021

The year was a pandemic, but Portugal managed to enter the Top 10 of the most attractive European economies for foreign investment. This is one of the conclusions of the EY Attractiveness Survey Portugal 2021, which every year assesses the perception of foreign investors about how attractive the country is at this level. Covid-19 resulted in a drop in the number of investments raised (four fewer than in the previous year), but the future perspectives are positive as 37% of respondents plan to create or expand their operations in Portugal.

France remains the most attractive European economy for foreign investment, followed by the United Kingdom, Germany, and Spain, which remained in the same positions compared to 2019, but all with a drop in the number of new projects. The pandemic resulted in a 13% drop in FDI projects in Europe – Spain was the most affected (-27%), but in Portugal the drop was 3%.

Of the 154 FDI projects that Portugal attracted in 2020, 113 were new and the remaining 41 (27%) represent an expansion of existing projects. These investments resulted in the creation of more than 8,900 jobs, 57% of which were associated with new projects. The North region obtained about 55 projects in 2020.

Research and development (R&D), particularly related to investments in IT and digital services, is "the" growing activity, says the report. The increase in investments in R&D is a trend that has been increasing since 2018 — 12% in 2018, 17% in 2019 and 21% in 2020.

The manufacturing industry, R&D and shared service centers (an area that attracted 33 FDI projects) are "the engines of the future", says the study, as more than half (62%) of respondents planning to invest in Portugal, or expand the activity they already have in the country, they intend to do so in these areas.

The study also reveals that 70% of investors were European and 30% from the rest of the world, a trend that is in line with recent years. But the United States was the country responsible for the largest number of projects (25), followed by Spain with 23 and France with 22. Germany and the United Kingdom accounted for 16 and 13 investments, respectively, but Belgium with four projects doubled the performance of 2019.

The attractiveness of Portugal continues to reside in factors such as quality of life; climate of social stability; reliability and coverage of transport, telecommunications, energy infrastructures; but also in the availability and qualifications of the workforce. But the study's authors caution that the country cannot continue to rely solely on these more traditional assets. "Innovation, transparency and qualifications must be the engines of a long-term strategy", warn the authors of the study.

The study reveals that there are reasons for optimism because 37% of respondents plan to invest in Portugal or expand the activity they already have in the country and half believe that the country's attractiveness will increase.