Portugal's Extraordinary Increase in Foreign Direct Investment Projects

According to a recent study conducted by EY, Portugal experienced an unprecedented surge in foreign investment projects in 2022, solidifying its position as an attractive destination for global business ventures. With a remarkable 24% increase compared to the previous year, Portugal secured a record-breaking 248 Foreign Direct Investment (FDI) projects, opening up potential employment opportunities for nearly 22,000 individuals.

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

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

Although the survey did not explicitly address wage costs, it is crucial to acknowledge the potential threat to Portugal's competitiveness posed by emerging countries such as Turkey and Poland, which offer lower wage costs and contribute to a shifting investment landscape.

The notable findings from the EY Attractiveness Survey Portugal demonstrate the country's success in fostering a highly appealing investment climate. Through favourable conditions and continuous efforts to attract foreign businesses, Portugal has positioned itself 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, a significant portion (99) were made in the software and IT services sector, solidifying it as a highly sought-after area for investment in the country.

It's worth highlighting that a striking 76% of these projects involve companies venturing into Portugal for the first time, while the remaining projects signify expansions of existing operations. The IT sector, which experienced an impressive growth rate of 52% in 2022, has seen a significant surge. In fact, during the period between 2020 and 2022, Portugal secured its spot as the fourth most acclaimed destination for IT companies, only trailing behind Germany, the United Kingdom, and France in terms of project numbers.

Moreover, the financial sector has witnessed a staggering triple-digit growth, specifically an astounding 200% increase in 2022. When it comes to the origins of these investments, Germany takes the lead with 36 projects, surpassing the United States, which had 35 projects the previous year. France and the United Kingdom trail closely with 25 and 24 projects respectively.

What's intriguing is that several countries, which previously may not have regarded Portugal as a top investment destination, are now displaying a keen interest. For example, the Netherlands has witnessed a remarkable rise from four to 14 projects between 2021 and 2022, while Denmark has bolstered its investments from two to eight.

These recent developments undoubtedly illustrate Portugal's growing prominence and appeal as a tech and business innovation hub.

Source: Expresso