Industry leads investment

In 2020, Portugal moved up from 11th to become the 10th-most attractive economy for foreign direct investment (FDI) in terms of the number of projects (154). This is the conclusion of a study by EY.

"In a challenging year like 2020, Portugal joined the ‘top’ 10 most attractive countries for foreign direct investment (FDI) in terms of the number of projects,” stated the consulting firm.

According to the study, last year there were 154 FDI projects in the Portuguese market, 70% of which used European funds while 30% were funded from outside Europe. These projects were responsible for the creation of at least 9,000 jobs.

However, these 154 projects represented a decline of 3% compared to the 158 recorded in 2019, which was largely the result of the uncertainties caused by the pandemic, which resulted in a 13% fall in FDI across Europe compared to the previous year.

Despite the slight reduction in FDI in Portugal, 37% of those surveyed planned to establish or expand their operations in Portugal over the coming 12 months. The three most attractive countries for foreign investors were France, the United Kingdom and Germany.

"While the economic prospects are still being influenced by the pandemic, Portugal is returning to business and we hope to see an increase in the number of merger and acquisition operations in Portugal,” said Miguel Farinha, head of strategy and transactions at EY Portugal.

Lisbon remained the most attractive region for foreign investment, with a total of 68 projects (62 in 2019), mainly in the digital and business services areas. Next is the North region, with 55 projects (51 in 2019), principally in the digital sector and the manufacture and supply of transport equipment sector.

Industry leads
With regard to foreign investment intentions in 2020, industry was the most attractive activity, with 37 announced projects (24%).

Research & Development took second place, attracting 21% of foreign investment (33 announced projects), mainly in the digital and information technology sectors.

"In addition to the digital and technology areas that already account for one-third of FDI projects begun last year, Portugal seems to be on track to attract future investment in these areas, with 45% of investors believing the digital economy will be the main driver of the country’s economic growth in the coming years,” Miguel Cardoso Pinto, head of EY-Parthenon, told Lusa.

The EY Attractiveness Survey Portugal 2021 is an annual assessment of the views of foreign investors as to the country’s attractiveness as a destination for FDI.