Portuguese economy expected to contract by 3 pct this year

11 July 2012

The Bank of Portugal slightly improved its forecast for Portugal’s gross domestic product (GDP) this year to a recession of 3 percent reported in its Summer Economic Bulletin published Tuesday in Lisbon, as compared to a previous projection of minus 3.4 percent.

The change to the forecast is due to an expected improvement in exports and consumer spending. Exports are expected to post growth of 3.5 percent – as compared to 2.7 percent previously – and consumer spending is expected to fall by 5.6 percent as compared to a previous forecast drop of 7.3 percent.

Projections for public spending, investment and imports were lowered and in the case of investment the new projection is of minus 12.7 percent.

For 2013, “we project stagnation of economic activity,” said the report published by the central bank, which noted that the inherent risks to the projections were negative.

The Bank of Portugal also points to a significant improvement in the economy’s foreign financing needs and that the trade deficit this year is expected to total 1.7 percent – the Spring projection was 2.8 percent – and in 2013 it is expected to post a surplus of 0.8 percent, as compared to a previous projection of a 0.4 percent deficit. (macauhub)