Another indicator that reveals a deterioration is related to the future expectations of the executives surveyed. "Only 60% of the executives interviewed expect to establish or expand their operations in Portugal within a year, down from 84% in the previous survey, but slightly above the European average (59%)."

Confidence in the medium-term outlook also softened, with 61% anticipating an increase in Portugal's attractiveness over the next three years, compared to 78% the previous year, a percentage identical to that recorded in Europe.

Part of this decline in outlook is explained by the end of a "positive differentiation" that benefited the country. "Portugal shone in Europe in recent years. Investors were looking more optimistically at Europe,” Miguel Cardoso Pinto, responsible for the study and leader of EY-Parthenon, explained to ECO. According to the expert, the slowdown felt at the European level, driven by more unfavourable macroeconomic conditions and geopolitical instability, is extending to Portugal.

In sectoral terms, software and IT services continue to lead in FDI, with 137 projects secured in 2024, a decrease of 23 projects compared to 2023, which, “still places Portugal in 4th place in the European ranking for this sector (representing 29.1% of all FDI projects in Portugal, compared to 14.6% in Europe),” the study states. Following closely behind is the business services and professional services sector. Together, these sectors accounted for “almost half of all FDI initiatives” last year.

Sustainability

“In a context of strong global uncertainty, Portugal once again demonstrated its an environment favourable to the creation and development of businesses, and a commitment to sustainable growth. Among those planning to invest in Portugal this year, 68% already operate in the country, reflecting the continued appreciation and commitment of investors,” highlights Miguel Farinha, Country Manager Partner at EY Portugal, quoted in the study.

Miguel Farinha adds that the study “reinforces confidence in the quality and qualifications of the national workforce, as well as in its competitiveness and openness to new markets and customers, in a strategically positioned country.”

“Portugal will continue to be a very attractive country for FDI,” adds Miguel Cardoso Pinto, reinforcing the importance of the country remaining among the 10 most attractive countries in Europe, with 3.6% of FDI in the region, representing 1.86 billion euros in investment.

By region, the EY Attractiveness Survey Portugal reveals that although Lisbon “continues to lead as an FDI destination, the Central region reinforces its second place in terms of attractiveness.”

Despite the reduction in FDI projects in Portugal, job creation linked to foreign investment has grown, which contrasts with the European trend. There has been a significant decrease (-16%). According to the manager's analysis, average job creation per project in Portugal increased by 3% in 2024.