OECD forecasts that Portugal’s economy will contract by 1.8 pct in 2013

28 November 2012

The Portuguese economy is expected to see a contraction of 1.8 percent in 2013, the Organization for Economic Cooperation and Development (OECD) said in Paris Tuesday, adding that in 2014 it expected the economy to grow 0.9 percent, according to its Economic Outlook report.

The projection of a 1.8 percent contraction in 2013 is almost twice the 1 percent outlined in the Portuguese State Budget and the reports from the supervising committee for Portugal’s financial bailout plan and the projection for 2014 is lower than the 1.2 percent announced by the Portuguese government.

The OECD also said that, “meeting targets for the nominal deficit” – of 4.5 percent of Gross Domestic Product (GDP) in 2013 and 2.5 percent of GDP in 2014 – “will require additional budgetary consolidation measures,” beyond the 4 billion-euro cut in expenditure outlined for next year.

The organisation noted that, even for the revised budget deficit target for 2012 (5 percent), additional measures had been needed specifically increased taxes and the income from the concession of state airport manager Aeroportos de Portugal.

The OECD said that budgetary consolidation was “necessary” and that Portugal should continue with its “strict application,” of the plan set out with the International Monetary Fund, the European Commission, and the European Central Bank, which would imply that the economy would, “remain in recession for some time.” (macauhub)