France has gained increasing weight in the economic relationship with Portugal, as a source of investment, but also as a market, with a trade balance that has been leaning towards the Portuguese side, thus asserting itself as a structuring agent for companies and entrepreneurs. Speaking to Jornal Económico (JE), the president of Aicep Portugal Global – Agency for Investment and Foreign Trade of Portugal, Luís Castro Henriques, referee that in the five years ending in 2020, French net direct investment in Portugal has multiplied by more seven times. In terms of inventory, French foreign direct investment (FDI) exceeded 12.8 billion euros at the end of the first half of this year, representing 8.3% of the total. France thus asserts itself as one of the five most relevant geographies of origin of foreign investment in Portugal.
Commercial partner growing
This economic relationship is not limited to FDI, because France’s relative importance as a trading partner has grown, asserting itself as the third supplier and increasingly occupying the position of second largest customer, even after the impact of the pandemic . In 2019, before the emergence of Covid-19, more than 7.7 billion euros of goods and 3.4 million euros of services were sold by Portugal to French customers.
Responsible for a commercial surplus of around 1.5 million euros in favor of Portugal, the French market is structuring for national companies and companies.
And the volume of trade means job creation, with the French branches being the major foreign employer in Portugal, especially if we take into account sectors such as transport and logistics, commerce, information and communication technologies, but also industry , related to the automobile sector, which is visible, for example, in the profile of companies selected for the Luso-French Trophies, promoted by the Portuguese-French Chamber of Commerce and Industry (CCILF).
Globally, we are talking about 750 companies with French capital, which employ more than 60,000 workers.
And, for a few years, French companies have made Portugal a privileged destination for nearshoring businesses, with large banking and insurance-related services companies transferring operations to Portugal.
Also, don’t think that the Portuguese are stuck and don’t take advantage of the French market to also invest back. During the first nine months of this year, the stock of Portuguese FDI in France reached 1.4 billion euros, with reference to the initiative of relevant Portuguese groups operating throughout Gaulish territory, such as Amorim, Visabeira, Renova , Purever, Alves Ribeiro or even the “unicorns” of Portuguese origin, which are very active, such as Talkdesk and Outsystems.
It should be noted that France is a potentate in the capacity of attracting industrial investments, as well as research and development (R&D), ahead of the United Kingdom and Germany. The most appealing sectors for large foreign investors in France are focused on renewable energies, something fundamental at the present time, where it is expected to be less dependent on fossil energies and when the European Union defined rules for the process of decarbonising the economy, with targets ambitious goals set for the end of the decade. And it is also a country for large investments in the health area, reflecting the high purchasing power of its citizens and also the problem of changing the demographic pyramid.
Florence Mangin, French Ambassador to Portugal, emphasizes (in the interview in this special) that the country is receptive and open to industrial projects where Portuguese technology is at the fore, as in the sectors linked to furniture, wood, glass and ceramics. In terms of services, the French market is receptive to the civil construction sector, an area where emigration in the 60s of the last century was relevant.
In distribution, the French have a public operator available to investors and exporters, Business France. Data cited by Lusa highlighted that the French government rose from 6% to 6.25% its economic growth forecast for 2021. In the presentation of the French budget, the Minister of Economy, Bruno Le Maire, mentioned that it was expected for this month December a level of activity identical to the pre-pandemic period. This is the last budget of the current term of President Emmanuel Macron and closes with an investment plan of 30 million euros. In French accounts, the public deficit is expected to be 5% in 2022, well above the one preferred by Brussels, while the weight of public debt in the Gross Domestic Product has dropped slightly to 114%.
The French economy minister has promised that the strategy will not be to balance public finances at the expense of long periods of austerity, but rather before the reforms that have taken place, and classified the 2008 option as a mistake. Unemployment expected for this semester in France is 7.6%, the lowest since the 2008 financial crisis. controlled, either in terms of electricity or indirectly in gas. For its part, the “France 2030” plan presented six months of presidential updates. It aims to relaunch industrial France, with innovation critical for the country’s financial social model. One of the main measures will be the investment of millions of euros in small nuclear reactors, a vast energy used in France that does not generate greenhouse gases. However, this energy option is not consensual. The country will also invest four billion euros in the development of a low-carbon aircraft and to produce around two million electric and hybrid vehicles by 2030. There will also be investment in robotics for agriculture.
real estate investment still on the rise
Real estate has also been a destination for French investment. The climate and cost of living in Portugal have increasingly attracted French people, both as residents, benefiting from a competitive fiscal framework, and in tourism. Last year, an atypical period due to the pandemic, the French developed themselves the most spendthrift tourists in Portuguese territory, surpassing a position that was held by the British. According to the Bank of Portugal, in 2020, French tourists will approve 1,551 million euros in Portugal. And they also led in the first half of this year.
In 2016, the United Kingdom and China were overtaken by the French, who became the biggest foreign investors in Portuguese real estate. The “Living Destination” study recently presented by the real estate consultancy JLL showed that this reality has increased, that the French are the third nationality with the greatest weight in international demand for housing in the Portuguese market, accounting for 16%, behind Brazilians.
At the end of last year, 16,787 people were registered in the consular register at the French Embassy in Portugal, making the French the eighth most important foreign community in the country.