Portugal rises to 8th place in the 'ranking' of those that attract most investment in Europe

Portugal climbed two positions in the index of European countries that attract more foreign direct investment, drawn up annually by consultancy EY. The area of technologies has been an important magnet.

After, in 2020, having achieved the feat of, for the first time, entering the 'top 10' of European economies that most attract foreign direct investment projects, Portugal climbed two positions last year, rising to 8th place in the 'ranking' prepared by EY consultancy.

In 2021, "the year in which the Portuguese economy grew at the best pace of the last decades, following the strong contraction caused by the pandemic," Portugal attracted 200 foreign investment projects, which represents an increase of 30% compared to 2020, according to data from the EY European Attractiveness Survey 2022, which annually assesses the perception of foreign investors regarding the attractiveness of Europe and its competitors.

In light of the study, France won the title of most attractive country for foreign direct investment, with a total of 1,222 announced projects, or 24% more than in 2020, in a podium that is completed with the United Kingdom and Germany.

Spain, Turkey, Belgium and Italy follow on the list, with Portugal then emerging in 8th position, with a 3% share of foreign direct investment raised, ahead of Poland and Ireland, which rounded off the 'top 10'.

"Despite the damaging effects of the covid-19 pandemic, the Portuguese economy showed great resilience and managed to regain momentum in the second half of last year. Foreign investors have not stopped looking at the opportunities in our market, and the result is plain to see. We are perceived today as the 8th most attractive European country for foreign capital, ahead of much larger and traditionally stronger economies," said Miguel Farinha, partner at EY Portugal, quoted in a statement accompanying the study.

And the outlook for 2022 "is encouraging," adds Miguel Cardoso Pinto, also partner at EY Portugal and head of EY-Parthenon, despite the upsets caused by the war in Eastern Europe: "This year, despite the fact that the conflict in Ukraine is generating instability and a sharp rise in inflation, economic indicators have been positive and estimates are favourable. The European Commission anticipates a 5.8% growth for the Portuguese economy, the highest in Europe, and this will certainly have reflections on the country's attractiveness to investors."

The area of technologies has been one of the main magnets for attracting foreign direct investment. According to the president of the National Innovation Agency, Joana Mendonça, "Portugal has become more attractive for investments of a technological nature and the country now hosts R&D operations of several companies in the 'high-tech' sector and a number of unicorns", having, in fact, "one of the largest numbers of unicorns 'per capita'".

"Many factors have contributed to this, including the maturity and quality of research in various scientific fields, the quality of higher education in technological and digital areas, and a growing number of highly qualified personnel, including PhD graduates," she says, pointing out that "companies also benefit from tax incentives for the development of R&D activities, which have increased by 91% since 2015."

Looking at Europe as a whole, the study, based on a survey of 501 international decision-makers, indicates that it has remained "the world's most attractive destination for cross-border investment, benefiting from its size, stability and diversity". In 2021, 5,877 foreign direct investment projects were announced in the old continent, or 5% more than the previous year.

 According to EY, this improvement was noted as being due, "to a large extent, to the efforts undertaken by the European Commission to promote growth in the region, since, for 63% of respondents, the European Recovery and Resilience Fund was a decisive factor in the decision to maintain or expand operations in Europe."

Despite the increase in investment, the figures are still 12% below the maximum reached in 2017.

Already for this year the study recognises that the new geopolitical and economic environment, created mainly by the war in Ukraine, implies that Europe's immediate attractiveness to investors may be challenged." Even so, points out EY, "the long-term outlook remains robust, with 64% of respondents confident that Europe's attractiveness will improve over the next three years".