Lisbon, Portugal, 18 Oct – Portugal’s economy is expected to contract by 2.8 percent in 2012, which is far above the estimates from the Bank of Portugal and the government itself, which last August forecast a drop of 1.8 percent, according to the State Budget proposal for 2012.
Whilst presenting the document that was handed over to parliament Monday in Lisbon, Finance Minister Vítor Gaspar noted that the 2012 recession would be added to one of 1.9 percent this year.
Unemployment, in its turn, is expected to continue rising and the government projects a 13.4 percent rate in 2012.
For this year the government forecasts a smaller recession than it had projected in August, as the State Budget proposal points to a GDP contraction of 1.9 percent against 2.2 percent put forward in the Budget Strategy Document.
In the Autumn Economic Bulletin, the Bank of Portugal forecast a downturn of 1.9 percent of GDP in 2011 and 2.2 percent in 2012, whilst the European Commission and the International Monetary Fund (IMF) forecast a drop of 2.2 percent in 2011 and 1.8 percent in 2012.
Investment in 2012 is also expected to see a downturn of around 9.5 percent and consumer spending to contract by 4.8 percent in 2012 and 3.5 percent this year.
On of the Portuguese government’s targets remains meeting the agreed bail-out package targets set for the budget deficit of a maximum of 5.9 percent this year and 4.5 percent in 2012. (macauhub)