Portugal’s economy to contract 1.6% in 2013 and 3% this year

14 November 2012

Portugal’s economy should contract by 1.6 percent in 2013, the Banco de Portugal has announced, revising its previous forecast of stagnation or a rate of 0 percent. The figure is also above the forecasted drop of 1 percent anticipated by the Portuguese government.

For this year, the central bank maintains the previous forecast indicating a drop of 3 percent, a figure similar to the one forecast by the government and by the tripartite commission accompanying the financial aid process for Portugal.

“The recession forecast for next year is pressured especially by a major revision of internal demand prospects,” indicates the autumn economic bulletin released by the Banco de Portugal.

In the summer forecasts released last 10 July the bank forecast that internal demand would fall by 1.4 percent in 2013, but it now anticipates a drop of 4.5 percent.

“The downward revision of private consumption prospects contributes to this result, with the expectation that families will contract even more than previously expected next year, after a steep drop this year,” the bank’s bulletin states.

The forecasts now released indicate that private consumption will fall by 5.8 percent in 2012 (in July the forecast was 5.6 percent) and by 3.6 percent in 2013 (in July the forecast was 1.3 percent). (macauhub)