Portugal to remain in recession in 2013 and OECD expects further austerity measures

23 May 2012

Portugal will remain in recession in 2013, a year in which the unemployment rate is expected to total 16.2 percent after hitting 15.4 percent this year, the Organisation for Economic Cooperation and Development (OECD) said in Paris Tuesday.

The OECD expects Portugal’s Gross Domestic Product (GDP) to contract by 3.2 percent this year, which will be followed by a contraction of 0.9 percent in 2013, according to a chapter on Portugal in the OECD’s Economic Outlook.

If these projections are confirmed, the Portuguese economy will have been in recession for three years running, from 2011 to 2013, added to the recession seen in 2009, in which the economy contracted by 2.9 percent.

The OECD’s forecasts point to budget deficits of 4.6 percent of GDP this year and 3.5 percent next year, which is higher than the official targets of 4.5 percent for this year and 3 percent in 2013.

Based on these projects the OECD’s report noted that “achieving the established targets (…) will require additional budgetary consolidation measures, along with those included in Portugal’s financial aid programme.” (macauhub)