For the second consecutive year, Portugal leads Europe in Investor’s perception about attractiveness and their short-term investment plans. Once viewed as “Europe’s best kept secret” for tourists and investors, Portugal is now in the limelight and reaping the initial economic benefit of the added exposure.
This year’s survey reveals that the perception of Portugal’s attractiveness and investors’ short-term investment plans outpaces European countries.
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A growing and innovation country
Portugal has undergone a challenging financial and economic adjustment program between 2011 and 2013, in the aftermath of the European Union International Monetary Fund (EU-IMF).
After three years of EU-IMF Economic and Financial Assistance Program, in May 2014, Portugal recovered access to international debt markets and was able to repay its IMF Loan ahead of scheduled.
In 2017, exports registered an average growth rate of 7.9%, with new gains in market share. It was mainly driven by sales in the automotive sector, and spread predominantly to neighboring countries (Spain, Germany and France), but also increasingly to distant destinations such as Japan and China.
According to the Bank of Portugal (BoP), FDI flows also increased to a cumulative 61% of the GDP in 2017 (versus 52% in 2012).
Between 2008 and 2017, sectors claiming larger amounts of foreign investments were electricity, gas, water and construction. ICT activities also experienced a substantial increase of 291%, growing from €2b to €6b during the same period (GEE).
Portugal's positioning in independent international rankings
Portugal shows a growing performance in the following areas:
- The third most peaceful country in the world and in the first place in Europe
- A moderately free economy
- A competitive country
- Increasing competitiveness in technology readiness and innovation
- Thirtieth most innovative country
- Soft power country
- The large flows of FDI into Portugal led a three-positions increas to become the 13th best country brand for trade among 42 European countries
- Higher education recognized internationally
- Labor market and talent
In 2017, Portugal attracted more new projects. New projects lead the investments projects with 72% of the total invested. Although there was a significant decline from 2016, expansion projects are still ocurring, representing 28% of FDI’s total projects.
Regarding the increase of jobs created, Portugal occupies the 11th place in Europe, and the growth rate is higher than the EU average.
Benchmark of number of jobs created
Portugal unveils its regions
The distinctiveness of each region
Portugal has seven main geographic areas. Although similar in scale, the diversity and differences among them is significant from a demographic, environment and landscape perspective, as well as from an economic specialization.
- Porto has won the Best Startup Friendly City of Europe.
- Established investors say strategic location and transport infrastructure are key when investing in the region.
- Lisbon in the third-best city for culture and creativity, and the best destination for city break.
FDI in 2017
Since 2008, THE EIM-IBM database has registered an increase in the number of projects (except for the slowdown in 2015) and has rosen significantly from 2016 to 2017, with a record number of 95 projects. It is the biggest increase over the years in analysis. FDI grew more than 61%.
FDI projects in 2017 generated 7,657 jobs. This is, in part, a result of different types of FDI having different job requirements, as well as with the fact that out of the total FDIs recorded, 68 are new investments and 23 are expansion projects.
- Manufacturing and R&D are the main sources of projects and jobs
- In 2017, Portugal attracted more new projects
- The USA, France, the UK and Spain are leading FDI in Portugal
- Withing Europe, Portugal represents a smaller percentage in FDI captured. Nevertheless, the country is among those with highest scores, occupying the ninth place, with a 61% increase in FDI projects
FDI by region
Portugal’s attractiveness to FDI has been improving year-on-year, to reach its record level in 2017. Over the years, an increasing number of relevant partnerships between main stakeholders, from both the private and public sectors, facilitated the location of flagship investment projects in the country.
- North continues to attract more investors
- North and Lisbon have 70% of total FDI projects
- Center, Alentejo and North lead expansion projects
Portugal: outpacing Europe
Confidence in Portugal’s future attractiveness is on a growth path, with 65% expecting a positive evolution compared with last year’s 62%.
However, there is still a big gap between established and unestablished investors. The key conclusion is, even though there is an improvement in responses by both investors, we can still see a large gap between companies who are in Portugal.
Portugal has once more outpaced their fellow European countries both in terms of attractiveness (65%), which is the highest result shown.
Attractiveness perception and short-term investment plans across European countries
Majority of projects are related to sales and marketing office
Projects related to sales and marketing office constitute the majority. This indicates an increase in the number of projects this year compared with last year, and on what Europe plans to invest in.
Top of investment projects in Portugal and Europe, 2018 vs. 2017
These results are naturally influenced by the nature of past projects implemented in Portugal and those that do not have the need for continuous investments. This is particularly true in relation to certain R&D projects that happened in previous year.
Top attractive and less attractive factors (total responders)
What needs to be improved to become an innovation leader and be more attractive?
41% Improve education and training in new tech
38% Increase tax incentives
25% Invest in digital infrastructure
41% Develop education skills
31% Reduce taxation
30% Support high-tech industries and innovation
38% Support SMEs
Which sectors will drive Portugal?
Real estate and construction
ICT and IT
Logistics and distribution channels
Transport industry and automotive
How can we help?
- Services for investors and multipliers
- Identification of acquisition opportunities
- Assessment of greenfield opportunities
- Working with the public sector
- Assessment of attractiveness levels
- Region’s and cities’ attractiveness reinforcement
- Investment promotion
- Investment intention’s assessment
- Efficiency of policies and public investments
Florbela LimaPartner, Transaction Advisory ServicesPhone: +351 217 949 341Email: Florbela.email@example.com
Luís FlorindoAssociate Partner, Business DevelopmentPhone: +351 217 949 333Email: firstname.lastname@example.org
Telma FrancoAssociate Director and Press Relations, BMCPhone: +351 217 912 292Email: Telma.email@example.com