April 22, 2020 / 12:44 PM / 2 months ago

Portugal says no foreign investment slowdown despite coronavirus

LISBON (Reuters) - Portugal has seen no slowdown in foreign investment despite the coronavirus crisis and has even forged new deals in the last few weeks, Economy Minister Pedro Siza Vieira said on Wednesday.

FILE PHOTO: Portugal's Economy Minister Pedro Siza Vieira speaks during an interview with Reuters in Lisbon, Portugal January 31, 2020. Picture taken January 31, 2020. REUTERS/Rafael Marchante

Siza Vieira said that although some foreign investors might drop out in the future due to the crisis, Portugal would remain an attractive country in the long run, not least because of its relatively subdued coronavirus tally after early counter-measures imposed by the government.

“So far, we have not had any investment cancellations,” he told a news conference. “On the contrary, we know that some ongoing deals took place in recent weeks.”

In February, before the coronavirus hit Europe, the Portuguese state agency that promotes investment and exports, AICEP, said it expected to hit a new investment record for export-focused projects this year, with authorities scrutinising plans worth more than 1 billion euros.

It is unclear how hard the coronavirus pandemic will impact on such plans but economists expect most countries to go into deep recession as a result of lockdowns imposed to check the spread of the virus.

The International Monetary Fund expects Portugal’s gross domestic product to contract by 8% this year. It also expects unemployment, which had been falling, to more than double to 13.9% this year and the budget deficit to hit 7.1% of GDP.

CONTAINING CORONAVIRUS

Exports and booming tourism supported Portugal’s economic and fiscal recovery after its 2011-14 debt crisis and bailout.

“What attracts investors in the first place are factors that will continue, such as security and political stability,” Siza Vieira said, adding that the way Portugal tackled the outbreak would also be taken into consideration by future investors.

Portugal has so far reported 21,379 confirmed coronavirus cases and 762 deaths, a relatively low toll, especially compared to hard-hit neighbouring Spain, with almost 22,000 dead, even taking into account the population sizes. Portugal has around 10 million people and Spain 47 million.

Portugal only had around 642 confirmed cases and two deaths from coronavirus when it declared a nationwide state of emergency on March 18, shutting down all non-essential services. Spain reported its first death on March 3 but only imposed its lockdown 11 days later. It took France even longer.

“Few countries acted as early as Portugal did,” Siza Vieira said. “And we managed to do this without having to close all our economic activity because manufacturing, construction and transport are still operating.”

Portugal has extended its lockdown until May 2.

Reporting by Catarina Demony and Sergio Goncalves; Editing by Andrei Khalip and Gareth Jones

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