H1 FDI hits €2bn in Portugal

As regards foreign direct investment (FDI), Portugal has emerged as a noteworthy contender, with recent figures from Banco de Portugal affirming its resilience. The Iberian nation, known for its picturesque landscapes and vibrant culture, clocked a commendable €2 billion ($2.17 billion) in inward FDI during the first half of 2023. This report, disclosed by Portugal’s central bank at the close of August, sheds light on the dynamics shaping the nation’s investment landscape.

A cursory analysis of this capital infusion reveals that a substantial portion of the inbound investments gravitated towards the realm of real estate. It’s important to note that these investments predominantly emanated from foreign shores, as non-residents sought to capitalise on the nation’s burgeoning property market. The report by Banco de Portugal underscores the prominence of European investors in this particular domain, marking their decisive presence on the FDI map.

Comparatively, one must hark back to the preceding year to fully comprehend the scale of this economic phenomenon. In the first half of 2022, Portugal had beckoned €4.66 billion in FDI, as per the central bank’s comprehensive data repository.

Delving deeper into the 2023 FDI statistics, we observe a compelling narrative taking shape. European investors emerge as the dominant players, injecting €980 million into the Portuguese economic landscape during the first six months of the year. Following closely behind, Asian investors contributed €513 million, while US-domiciled investors weighed in with €298 million. These numbers not only reflect the allure of Portugal but also highlight the diversity of its investor base.

But it’s not just inbound investments that are in the spotlight; outward FDI transactions also merit scrutiny. The report from Banco de Portugal underscores the significance of enterprises operating in the electricity, gas, and water sector, which extended their investments to European counterparts. This cross-border activity underscores Portugal’s growing footprint on the global investment stage.

Glenn Barklie, Chief Economist at Investment Monitor, provides insightful commentary on this phenomenon. He points out that greenfield FDI projects into Portugal surged by a remarkable 81% in 2022, citing data from GlobalData. In his assessment, Portugal serves as an exemplar to other tourism-dependent economies, showcasing how economic reforms can pave the way for investments spanning diverse sectors. Barklie underlines renewable energy as a pivotal growth sector, with Portugal securing a lion’s share of these projects. Furthermore, the nation’s tech industry has witnessed a pronounced uptick in investments.

As Barklie aptly observes, tourism, once the foremost driver of investment, now takes a backseat to tech, business services, and renewables. This transformation underscores Portugal’s evolution into a multifaceted investment hub, redefining its narrative on the global stage.