Portugal's Foreign Investment Landscape in 2022

According to a study conducted by EY, Portugal witnessed an unprecedented surge in foreign investment projects in 2022. The country's strong allure was propelled by several factors, making it an attractive destination for global business ventures. With a remarkable 24% increase compared to the previous year, Portugal managed to secure a record-breaking 248 Foreign Direct Investment (FDI) projects, creating potential employment opportunities reaching nearly 22,000.

Earning the sixth spot in Europe's FDI project ranking, Portugal has climbed two positions since 2021, showcasing its growing prominence on the international investment landscape. Additionally, Portugal experienced the third-highest growth in foreign investments among European Union (EU) member countries.

The EY Attractiveness Survey Portugal sheds light on the various facets that contributed to Portugal's enticing investment environment. The surveyed international business decision-makers highlighted key factors such as quality of life, social stability, and robust telecommunications infrastructure as major draws for investors. Furthermore, the report emphasized the significance of these social and infrastructure-related aspects in attracting foreign investment.

While not explicitly addressed in the survey, wage costs emerged as another crucial consideration for investors eyeing Portugal. However, it is essential to acknowledge the potential threat to Portugal's competitiveness posed by emerging countries like Turkey and Poland, as they offer lower wage costs and contribute to the shifting investment landscape.

The notable findings from the EY Attractiveness Survey Portugal demonstrate Portugal's success in fostering a highly appealing investment climate. The combination of favourable conditions and continuous efforts to attract foreign businesses has positioned Portugal as a compelling destination for those seeking lucrative investment opportunities.

Portugal's rise in the information technology landscape can be attributed to the restructuring of value chains and its continuous progress in recent years. Out of the 248 investments, 99 were made in the software and IT services sector, making it a highly sought-after area for investment in the country.

It is worth noting that 76% of these projects involve companies entering Portugal for the first time, while the rest represent expansions of existing operations. With a remarkable growth rate of 52% in 2022, the IT sector has experienced a significant boost. In fact, between 2020 and 2022, Portugal ranked fourth in attracting IT companies, following Germany, the United Kingdom, and France in terms of project numbers.

Additionally, the financial sector has witnessed a remarkable triple-digit growth of 200% in 2022. In terms of country origins for these investments, Germany leads the pack with 36 projects, surpassing the United States, which had 35 projects in the previous year. France and the United Kingdom are closely following with 25 and 24 projects respectively.

Other countries that previously did not consider Portugal as a top investment destination are now showing a keen interest. For instance, the Netherlands increased its projects from four to 14 from 2021 to 2022, and Denmark increased its investments from two to eight.

These recent developments clearly indicate Portugal's growing prominence and attractiveness as a hub for technology and business innovation.

Source: Expresso