Foreign Direct Investment in Portugal Declines by €400 Million in First Half of 2025
Portugal experienced a net outflow of €400 million in foreign direct investment (FDI) in the first six months of 2025, according to data published on Tuesday by the Bank of Portugal (BdP). This figure marks a significant downturn from the €3.5 billion positive balance recorded in the first half of 2024. The central bank's report indicates that the negative performance was largely concentrated in the first quarter of the year.
The Bank of Portugal provided a technical explanation for the headline figure, attributing the €0.4 billion negative result primarily to a reclassification of corporate financial positions. The report specifies a 'reduction in the debt of resident entities to non-resident companies of the same economic group' amounting to €1.6 billion. This liability was moved to the 'portfolio investment' category, as the relationship no longer met the statistical criteria for direct investment, thereby technically reducing the overall FDI stock.
The semester's performance was a tale of two quarters. A substantial negative flow of approximately €1 billion in the first quarter was followed by a partial recovery in the second quarter, which saw a positive inflow of €662 million. However, this rebound was insufficient to bring the half-year result into positive territory. The BdP's analysis provides a crucial layer of context to the numbers, distinguishing between new investment and the restructuring of existing capital by multinational corporations.
From a geographical standpoint, the reduction in FDI was principally driven by transactions involving other European nations. The most significant movement was a decrease in investment originating from Spain, which accounted for a €2.1 billion reduction. This outflow was partially mitigated by incoming investments from other countries. Switzerland emerged as a strong source of capital with an increase of €0.8 billion, followed by the United States with €0.3 billion, and both Italy and Belgium contributing €0.2 billion each.
The data on outward investment showed that Portuguese companies continued to expand their footprint abroad. Direct investment by Portuguese entities in foreign markets totaled €2.6 billion during the first half of 2025, a slight increase from the €2.4 billion invested during the same period in the previous year. The main recipients of this Portuguese capital were other European countries, with Spain (€0.7 billion), the Netherlands (€0.7 billion), and France (€0.5 billion) being the primary destinations.
This report from the Bank of Portugal offers a detailed snapshot of the capital flows shaping the national economy. While the headline FDI number indicates a contraction, the underlying factors point to a complex combination of corporate financial strategy and genuine, albeit more moderate, new investment flows from key international partners.
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