Portugal maintains 9th European place in terms of foreign direct investment

Portugal remained as the 9th European country in terms of foreign direct investment (IDE) in 2025, despite a 5% reduction, according to the EY Attractiveness Survey, today released.

Despite the most challenging international environment, with the increase in energy prices and geopolitical tensions, “Portugal still enters this period into a stronger macroeconomic position,” says EY’s study.

To this strengthened position contribute “better public finances, resilient domestic demand and a stable labour market”, factors that give the country “greater capacity to absorb external shocks”.

According to the consultant's study, Portugal captured 186 IDE projects, less 5% (or 10) than in the previous year, of which 37% were related to expansion projects and 63% to new projects.

Greater Lisbon, with 103 projects (55% of the total), and North, with 57 projects (31% of the total), represented the two main investment points, with ‘software’ and IT services being the main sectors covered.

The Alentejo, with 11 projects, had the biggest increase compared to 2024, led by the chemical sector, plastics and rubbers, “supported by significant investments in Sines”.

The United States of America was the main country of origin of foreign investment, with 31 projects (17% of the total), followed by Germany (19 projects), France (18 projects) and the United Kingdom (16 projects).

About 20% of investors questioned by EY pointed out that Portugal should prioritize the ecosystem of artificial intelligence, cloud and data centers to maximize the IDE, ahead of logistics and supply chains (16%) and sustainable reindustrialization and advanced industry (15%).

According to respondents, “the ability to attract international talent, the availability of renewable energy, political stability and a favorable regulatory environment” are the main factors that can help the country maximize this investment.

The availability of renewable energy (30%) is, in addition to quality of life (32%), one of the country's greatest advantages for investors, in particular due to the availability of low carbon green energy.

On the other hand, the main disadvantages highlighted are the size of the market, economic conditions, energy costs – pointed out by 25% of investors and rising by 12 percentage points from the previous survey – and access to funding.

According to EY, the contrast between advantages and disadvantages points to the main challenge for Portugal: translating the advantage in renewables into accessible and reliable energy.

Among respondents, 57% of investors admit to having plans to invest or expand operations in Portugal over the next 12 months, at a figure of three percentage points above the European average and close to the percentage that they believe Portugal's attractiveness will improve in the next three years (56%).

Still, 22% of respondents claim to have postponed, cancelled or reduced investment plans in Portugal in the last year. This compares with 34% in the European average.

As for the priorities identified are access to capital, (36%), support for small and medium-sized enterprises (29%), support for digital innovation and competitiveness (28%), support for strategic sectors such as artificial intelligence, clean energy and defense (27%) and reduce and simplify the tax system (26%).

EY’s study also concluded that Portugal should concentrate on “improving the conditions for financing, executing and scaling investments”, focusing on “high potential areas such as artificial intelligence, digital infrastructure, high value added services and advanced reindustrialization”.

This study defines attractiveness as a combination of image, investor confidence and perception of a country or region’s ability to offer the most competitive benefits to the IDE, with 200 investors being interviewed, of which 86% were in Europe, 9% in North America and 5% in other regions.