Bank of Portugal lowers projection for 2013 economic performance

27 March 2013

The Bank of Portugal (BdP) has lowered its projections for the performance of the Portuguese economy this year and now expects a recession of 2.3 percent, as compared to 1.9 percent previously, according to the Spring Bulletin issued Tuesday in Lisbon.

The central bank now expects a 3.8 percent drop in consumer spending, which is two basis points more than outlined in the previous bulletin and exports are expected to grow by 2.2 percent, against a previous projection of 2 percent.

The projection for investment was raised, from a drop of 8.1 percent to just 7.1 percent, and the Bank of Portugal said that reduced investment affected both companies and families.

And, despite an improved outlook for investment, this will not lead to improvements in the labour market, as there is an expected contraction of 3.3 percent in employment, following a fall of 4.2 percent last year.

These projections have been announced less than two weeks after the Portuguese government announced considerable changes to its budget deficit target.

For this year, rather than 4.5 percent of GDP, the budget deficit target has been raised to 5.5 percent (moving away from the 3 percent figure set in the initial memorandum of the Portuguese bailout package) and in 2014, rather than being required to keep to a deficit of 2.5 percent, the government now has a target of 4 percent. (macauhub)