In 2023, Portugal rose to the 6th position in Europe for Foreign Direct Investment (FDI) attractiveness according to the EY Attractiveness Survey. The country attracted a record 248 new FDI projects, marking a 24% increase from 2021.
Key Drivers of FDI Growth
Several factors have contributed to Portugal's upward trajectory in attracting FDI. Key among these are the country's institutional quality, simplified logistics, internet availability, green energy initiatives, and the education level of its workforce. All of which have steadily improved over the last 50 years since the country freed itself from dictatorial rule.
- Institutional Quality: Portugal's improvement over the last 50 years of its political environment and robustness of its legal framework have created an increasingly secure and predictable investment climate. The government's commitment to transparency and anti-corruption measures has further bolstered investor confidence. This is has all been further enforced through Portugal's decreased deficit and improved Moody's credit rating in Q4 2023 (Reuters).
- Simplified Logistics: Strategic investments in infrastructure, including ports, airports, and road networks, have enhanced Portugal's connectivity. These improvements facilitate efficient trade and transportation, making it easier for businesses to operate and expand within the country.
- Internet Availability: Portugal boasts advanced digital infrastructure, with widespread internet access and high-speed connectivity. This digital readiness supports the growth of tech-based industries and attracts companies looking to leverage digital technologies for their operations.
- Green Energy: Portugal's leadership in renewable energy is another significant draw for investors. The country has made substantial investments in wind, solar, and hydropower, positioning itself as a leader in sustainable energy. This commitment to green energy aligns with the growing emphasis on Environmental, Social, and Governance (ESG) criteria among global investors.
- Workforce Education: Portugal's education system, particularly in STEM (Science, Technology, Engineering, and Mathematics) fields, produces a highly skilled workforce. This talent pool is attractive to businesses seeking knowledgeable and capable employees to drive innovation and growth.
Investor Confidence and Future Prospects
The EY Attractiveness Survey reveals that 73% of investors surveyed intend to invest in Portugal, reflecting strong confidence in the country's economic prospects. This high level of interest is a testament to Portugal's successful efforts to create a favourable investment environment.
The survey highlights that investors are particularly drawn to sectors such as technology, renewable energy, real estate, and financial services. These industries are poised for significant growth, driven by Portugal's strategic initiatives and supportive policies.
Portugal's rising appeal within the global investment landscape has resulted in increased foreign investment that stretches beyond the tourism market that once was the only secure sector to deploy capital into for foreign operators.
