LISBON—With his company’s pottery selling briskly, Joaquim Beato, president of Molde Faianças SA, said ideally he would plow some of the profit into research and new-product development. Instead the company won’t spend a single euro.

Mr. Beato said he worries the Portuguese company’s sales in Europe will slacken as economies across the continent slow and import less. He is also concerned about obstacles at home—uncertainty over the Socialist government’s policies and the difficulty of borrowing from a banking system burdened by bad loans.

“Between investing and not investing, it is just safer not to invest,” said Mr. Beato, who employs about 100 people. “My mood right now is ‘Let’s go easy.’ ”

Portugal’s souring investment climate and weak economic growth are raising concern across Europe and beyond that the country, which required an international bailout five years ago, could choke again on a debt that is now nearly 130% of its gross domestic product.

The International Monetary Fund warned in September that while the debt is manageable for now, risks to Portugal’s capacity to repay are rising, leaving the country “uniquely vulnerable to shifts in market sentiment.”