When it comes to investment in Covid times, Portuguese firms teeter between anxiety and innovation

These are the conclusions from a survey conducted by the European Investment Bank

The European Investment Bank (EIB) and Banco de Portugal organized an online conference on 15 March to discuss the results of a survey conducted among Portuguese companies to measure the investment dynamic in that country over the past year. The event was attended by more than 400 economists, entrepreneurs and public sector representatives who got together to debate the impact of the coronavirus pandemic on the investment inclinations of the private sector and the need to restructure around digitalization and green financing in order to stay resilient for the future.

‘Investment, digitalization and green financing: The Portuguese case’ was the title of the conference

The results that were presented expectedly showed that the impact of the pandemic had negatively affected the business climate in the Iberian country given that nearly half of the businesses (47%) were expecting to or had already stepped back from additional investments. The most oft-cited reason was the uncertainty surrounding the ongoing pandemic which had drastically changed the way people consume, socialize and get productive.

Nevertheless, it is not all doom and gloom. The reported pessimism also reflects certain trends that speak more about how conservative or progressive the private sector in a country is overall. For more than half of businesses that planned to go ahead with investment plans in the future innovation, this was a top priority.

Statistics showed that half of the companies developed or introduced new products, services, methods as part of their investment strategies, and this was higher than the EU average of 43%.

“Despite the economic disruptions caused by COVID-19, Portuguese businesses place innovation at the top of their agenda. Firms affected by the economic crisis caused by COVID-19, realised that innovation and digitalisation might be the best available tools to keep up with the current crisis,” concluded Debora Revoltella, chief economist at EIB.

The private sector is one of the main drivers and importers of innovation into societies, and this was poignant for the Portuguese case as well given that 18% of firms pioneered new features into the market, that were not previously available to local consumers. In that aspect, they also performed better than the EU’s average of 15%.

One thing that stood out is the impact of climate change, with 76% of local companies reporting that it is causing consequences on their operations with 64% planning to invest in climate-related activities.