Now that I have written some articles about German companies and their investment volume in Portugal in the past few weeks. I conclude that Portugal was not at the center of German investment decisions for a long time, especially when Mrs. Merkel was still in government. Berlin focused primarily on Central and Eastern Europe, where its proximity to major supply chains and geographical advantages attracted investors. But now there are signs of a trend reversal. More German companies are rediscovering Portugal as an attractive location, and they are doing so for good reasons. Or rather, I knew that before!

This development is particularly visible in two major projects. Lufthansa Technik is building a new facility for the repair of engine components and aircraft parts in Santa Maria da Feira near Porto. At the same time, Volkswagen announced this week that it will produce its new electric car, the ID. Everyone, exclusively in Palmela near Lisbon and in Portugal, from 2027. Both are investments of strategic importance that not only create jobs but also send a clear signal: Portugal is once again perceived as an important partner when it comes to future technologies and industrial value creation.

The fact that German companies are regaining confidence is also due to the solid development of the Portuguese economy. In recent years, the country has noticeably consolidated its public finances. Public debt has been significantly reduced since 2020, and in 2023, it even achieved a budget surplus. In addition, there are stable external balances and a clear focus on structural reforms. This combination has strengthened the confidence of the financial markets and creates an environment in which investors, now also Germans, can implement long-term projects with planning security.

An additional driver is the European recovery and resilience programs. With the help of the NextGenerationEU funds, Portugal is investing massively in digitalization, renewable energy, and infrastructure. These European funds function as a catalyst that attracts and accelerates private investment. For German companies, this gives them the opportunity to embed their projects in a European-funded transformation program and thus exploit synergies that go far beyond the national framework.

But it is not only large corporations that are showing a presence. Successful German Portuguese partnerships are also emerging in technology-driven industries. One example of this is the cooperation between Critical Software from Coimbra with BMW, Airbus, among others, and recently also with the German Cognitivo AG. Together, they develop solutions for digital solutions for a wide range of applications, from armaments and IT security to automotive car service solutions and payment systems in the financial industry. The cooperation ranges from strategic consulting to regulatory aspects and technical implementation. This makes it clear that Portugal's innovative strength and expertise complement each other ideally with German market proximity and technical experience. And these are just a few examples of German companies in Portugal and partnerships in industry.

In addition to the economic data, Portugal is convincing with other locational advantages. The country benefits from its location at the interface between Europe, Africa, and transatlantic markets. It has a well-educated, multilingual workforce and offers competitive cost structures compared to other European countries. This mix makes it attractive for both manufacturing companies and service providers.

All in all, it all adds up to a picture that makes German investors sit up and take notice. Portugal today is not just a country that Cristiano Ronaldo has produced! But also, the country, which has its finances under control and which above all, actively invests in future fields and at the same time offers a stable environment for international partnerships. The most recent commitments by Volkswagen and Lufthansa Technik impressively underline this. Anyone who dares to take the step to Portugal now is betting on a country that combines security and dynamism and thus offers the best conditions for sustainable economic success.

Author

Paulo Lopes is a multi-talent Portuguese citizen who made his Master of Economics in Switzerland and studied law at Lusófona in Lisbon - CEO of Casaiberia in Lisbon and Algarve.

Paulo Lopes