Portugal's Foreign Investment Drops

The 34.9% drop in foreign direct investment (FDI) in 2025 brought total inflows down to €8.51 billion, a significant decrease from €13.071 billion in 2024. Despite this, the overall stock of FDI in Portugal actually increased, reaching €213.7 billion, equivalent to 70% of the nation's GDP. The services sector, particularly IT and business services, has recently been the primary driver of FDI projects, accounting for almost half of all initiatives in 2024. This dip in new investment coincides with a major overhaul of Portugal's research funding landscape. As of January 1, 2026, the Foundation for Science & Technology (FCT) and the National Innovation Agency (ANI) are merging into a new entity: the Agency for Research and Innovation (AI²). This new agency aims to create a "one-stop shop" to streamline grants and better support the entire lifecycle of ideas, from basic research to market application. The funding environment for researchers is shifting, with Portugal's FCT already adopting a lump-sum financing model for some exploratory research projects to simplify administration and focus on results. In a recent call, this model supported 400 projects with €24 million. Meanwhile, Portuguese institutions have secured €144 million from the EU's Horizon Europe program, nearly matching the total raised during the entire Horizon 2020 program (2014-2020). Portugal's public sector digitalization efforts have gained international recognition, with the country climbing to 3rd place in the OECD's 2025 Digital Government Index. The nation scored particularly high in the "Digital by Design" (96%) and "User-driven" (94%) categories, reflecting a strong push for people-centered public services. This strategy is part of the broader goal to position Portugal among the top 10 most digitally advanced EU nations by 2030. Across Europe, governments are increasingly adopting service design principles to improve public services. Finland, for example, is developing "zero-touch" services that use life events—like the birth of a child—to automatically trigger relevant government support without requiring user applications. These initiatives rely on secure, interoperable data systems, a priority shared by Portugal, which leads the OECD's "Government as a Platform" dimension. The push for better digital services is also driving the adoption of AI in the public sector. In 2025, AI was the most widely adopted emerging technology among European public entities, used for everything from citizen-facing chatbots to administrative efficiency. Case studies from Estonia show AI being used to predict health risks and manage patient data, demonstrating the potential for proactive and personalized public services. As digital public services become more complex, accessibility remains a key legal and ethical requirement. The latest Web Content Accessibility Guidelines, WCAG 2.2, published in October 2023, add new criteria to better support users with cognitive, learning, and motor disabilities, as well as enhancing mobile accessibility. While not yet the legal standard for most regulations, which currently cite WCAG 2.1, adopting the 2.2 guidelines is a way to future-proof public platforms.