
Foreign Direct Investment
According to UNCTAD's World Investment Report 2021, FDI flows to Portugal almost halved from USD 12 billion in 2019 to USD 6.3 billion in 2020, due to the economic crisis triggered by the Covid-19 pandemic. In the same year, the total stock of FDI stood at USD 162 billion. Data by OECD show that the majority of investments are directed to the financial and insurance services, professional, scientific and technical activities, the wholesale and retail sectors, real estate (as Lisbon has become a key destination for FDI in real estate), and manufacturing. The main investing countries are the Netherlands, Spain, Luxembourg, and France. According to EY's 2021 Attractiveness Survey, Portugal secured 154 new FDI projects in 2020, thus entering the top 10 investment destinations in Europe, positioning itself as one of the main destinations for FDI and demonstrating its resilience compared to other European countries. The latest data available from OECD shows that in the first semester of 2021 FDI inflows to Portugal totalled USD 2.6 billion, up by 21.6% compared to the same period one year earlier (when investments stood at USD 1.6 billion).
FDI is considered a priority by the Portuguese government. The country has recently launched the development of renewable energies, specifically solar energy (Portugal has the second largest solar power station in the world) and wave power (obtained from wave movements). These sectors could provide new opportunities to foreign investors, so as the IT and tourism sectors. Portugal also created "free zones" to strengthen technology-driven investments. Citizenship by Investment (ARI) via Portugal's Golden Visa programme offers a fast track for non-EU investors to gain citizenship. The government also launched the “Startup Visa” programme, a hosting program for foreign investors who wish to develop new projects in the Iberic country. Portugal offers a diversified economy and benefits from its EU member status, but bureaucratic and judicial burdens can discourage FDI. Government approval is required only in certain sensitive sectors, including defence, water management, public telecommunications, railways, maritime transportation, and air transport. The country should benefit from around EUR 14 billion in EU grants between 2021 and 2026, to support its Recovery and Resilience Plan. Portugal ranks 39th (out of 190) in the World Bank's latest Doing Business report, losing five positions compared to the previous edition.
Foreign Direct Investment | 2018 | 2019 | 2020 |
FDI Inward Flow (million USD) | 7,115 | 12,084 | 6,324 |
FDI Stock (million USD) | 155,498 | 165,411 | 183,556 |
Number of Greenfield Investments* | 130 | 166 | 110 |
Value of Greenfield Investments (million USD) | 3,610 | 3,468 | 4,081 |
Source: UNCTAD - Latest available data.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Country Comparison For the Protection of Investors | Portugal | OECD | United States | Germany |
Index of Transaction Transparency* | 6.0 | 6.5 | 7.0 | 5.0 |
Index of Manager’s Responsibility** | 5.0 | 5.3 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 7.0 | 7.3 | 9.0 | 5.0 |
Source: Doing Business - Latest available data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
