Foreign companies consider pulling out of Portugal

One in 10 foreign companies operating in Portugal is considering pulling out of the country, according to consultants Ernst & Young.

And a 23 million euro investment that the PSA Peugeot Citroën factory in Portugal is to receive in 2010 for the production of new models is likely to be the exception rather than the rule when it comes to Foreign Direct Investment (FDI) in Portugal.

According to the consultant study, one in every 10 foreign companies with investment in Portugal (nine per cent) is “definitely thinking of moving its operations to another country for good”.

The situation was worse than in 2008, when only one in six foreign companies said they were prepared to abandon Portugal.

“Central and Eastern Europe are the preferred destinations for relocation because companies can make savings by being closer to their markets, particularly markets that are growing the most,” said José Gonzaga Rosa, one of the consultants who carried out the study.

The study also revealed that only nine per cent of companies canvassed confirmed that they were interested in investing in Portugal, contrasting with the 15 per cent registered in 2008.

“Foreign Direct Investment in Europe fell in 2008 after enjoying five years of continual growth,” said Gonzaga Rosa.

Overall, the European Union attracted only six new international projects last year compared with 2007 while the number of job vacancies fell by 16 per cent, or 148,333 posts, and perspectives for the future were hardly optimistic given that 53 per cent of those asked said they were not intending to increase their investments in Europe this year, while 31 per cent claim they will not need to invest further within the EU in 2009.

In the ranking of countries still attracting most FDI, the United Kingdom, despite its deep recession, came top with 262 projects, followed by Paris and Madrid with 80 projects each.

In terms of sectors attracting the most investment, machinery and industrial equipment saw a 19 per cent increase in FDI.