US companies in Portugal – Expectations and prospects for 2022 on quicksand
The main results of an executive survey carried out on US companies operating in Portugal were revealed on Tuesday 15 March and debated by the American Chamber of Commerce (AmCham).
‘The Barometer of US Companies in Portugal 2022’ identified the main expectations and prospects of US company managers in Portugal which had been positive overall in terms of business recovery until war broke out in Europe.
With the unexpected invasion of Ukraine on 24 February and sanctions against one of the world’s largest gas and oil producers, not to mention war between two countries responsible for 20% of the world’s grain exports, those grounds for optimism may now be on quicksand.
When asked what the expectations were for business turnover for their businesses in 2022, 75% said it would increase, whereas 25% said it would remain unchanged.
When it came to corporate and other investments, 78% said there would be new investments, 19% said there would be no expected investments, while 3% expected divestment.
On the issue of taking on more staff, 3% said they would take on up to 20% more, 13% said they would take on less than 10% more, 34% said their staffing levels would remain the same, 19% said they would employ more than 20%.
The main challenges for US company directors in Portugal were Economic Instability (97%), Political Instability (84%), Increased Inflation and Interest Rates (81%), Instability in Tax Policies and Portuguese State Obligations (75%), Sanitary Crises (66%), Disruption in Supply Chains (59%), Climate and Environmental Changes (59%), Overseas Demand (56%), Internal Demand (53%) and Difficulty in Attracting and Retaining Qualified Talent (44%).
The biggest challenges in order of perceived severity for the companies they run, however, were Economic Instability and Uncertain Recovery (1), Digitalisation and Cybersecurity (2), Inflation and Interest Rate Increases (3), Tax Instability (4) and Pandemics (Health Crises) (5).
Quizzed on what they felt about Portugal’s economic situation for 2022, 37.5% felt pessimistic, 34.38% were optimistic and 40.63 had a neutral opinion.
And on their expectations on when Portugal would achieve similar levels of economic activity as it had in the pre-pandemic year of 2019: 47% thought so in 2023 and 25% after 2023. Regarding the time it would take for their sector to get back to normal: 16% in 2022, 40% in 2023 and 9% after 2023.
But in terms of recovery to 2019 levels of business in the US companies they ran in Portugal, 59% said they had already done so this year, 22% expected to at some time in 2022, 16% in 2023 and only 3% after 2023.
Miguel Dias Fernandes, PwC partner presented the results of the survey, giving a presentation with the CEO of PwC’s Survey Global.
Andreas Ortolá, Regional Manager of Microsoft, Rui Teixeira, COO of ManPower discussed various topics and shared their views about them in a panel moderated by AmCham President António Martins da Costa.
One of the results of the survey: What are the Main Challenges for Companies (Top 5) Economic instability and an Uncertain Recovery (66%); Digitalisation and Cyberattacks (59%); New Pandemic Waves (56%); Difficulty in Attracting and Retaining Qualified Talent (53%); Tax Policy Instability and Increase in Obligations (44%).
Rui Teixeira COO of Manpower could not continue with a model that prioritises the number of hours worked at the expense of value created.
Ukraine war could reshape expectations
Andreas Ortolá, Regional Manager of Microsoft said that between 30%-40% of Portuguese companies understood the importance of digital technology while Rui Minhos, CEO of Tabaqueira said his company was committed to changing the business to meet the requirements for a more sustainable business for both the environment and people.
AmCham Portugal in partnership with PwC as Knowledge Partner undertook the survey by canvassing the opinions of US firms in Portugal to find out their expectations and prospects for 2022 and received 32 replies from company bosses in various sectors.
Two years after the pandemic the global economy has begun to recover — at least until Russia invaded Ukraine – with world GDP expected to be around 4.9%.
Despite the war, the data collected from the survey concluded overall that 59% thought their company’s activities has reached levels similar to those seen before the pandemic — 28% when looking at their sector as a whole, while 47% through Portugal would recover in 2023 and 25% after that date.
Overall, company CEOs are more confident of the performance of the economy in 2022, 56% are more confident in terms of revenues this year, and 64% are very confident regarding growth over the next thee years.
Miguel Dias Fernandes, partner of PwC said the “general optimism is good indicator of the confidence that US companies have in economic recovery which is particularly relevant in light of two years of the pandemic”.
“Even though this optimism now has to be seen in the light of the current geopolitical tension, it is important that there is a prospect of growth in company revenues, which is reflected in their intentions to invest”.