Bank of Portugal revises economy’s growth in 2010 upward

14 July 2010

Lisbon, Portugal, 14 Jul – The Bank of Portugal has revised the Portuguese economy’s forecasted growth in 2010 upward from 0.4 percent to 0.9 percent, but lowered its forecast for 2011 from 0.8 percent to 0.2 percent, indicates the Summer Economic Bulletin published on Tuesday.

The central bank warns in the document that the Portuguese economy should suffer a “strong slowdown” in the second half of this year, which will be augmented in 2011 by austerity measures negatively affecting short-term growth.

“The growth prospects of the Portuguese economy will be negatively affected in the short term by the necessary process of budget consolidation,” the central bank states, highlighting that consumption and investment should retreat in real terms this year and next.

On the other hand, the Bank of Portugal indicates a likelihood of more than 50 percent that the economy will enter in recession next year.

In this context, the central bank document asserts that “there are risks of a new recession on the projection horizon,” including the possibility that the euro may devalue more than expected this year and next, and that the need for adjustment in countries “which are important destination markets for national exports” may lead to falling demand addressed to Portuguese companies. (macauhub)