Brussels, 16 May – Portugal will be the only European country in recession in 2012, according to the Spring forecasts from the European Commission, which estimates that the Portuguese economy will contract by 2.2 percent this year.
For 2012, the EC projects that the Portuguese economy will contract by 1.8 percent, whilst state debt will total 101.7 percent of Gross Domestic Product (GDP).
This year, only Greece out of all the European countries will post a greater contraction than Portugal, of 3.5 percent, although in 2012 it is expected to post growth of 1.1 percent.
The report noted, “the expected deterioration of working conditions, significant cuts in public sector salaries, a temporary acceleration of consumer prices due to a rise in Value-Added Tax (VAT) and limited support for family loans,” a set of factors that will lead to contraction of consumer spending.
Meanwhile the EC notes that exports will continue to contribute to reducing the impact of the remaining indicators on the development of the economy, as they are expected to post growth of 6.2 percent this year and 5.9 percent in 2012.
Meanwhile, the country’s National Statistics Institute (INE) said that Portugal’s GDP had posted negative growth of 0.7 percent in the first quarter of the year after contracting 0.6 percent in the final quarter of 2010, thus confirming that the Portuguese economy is in technical recession. (macauhub)