Portugal’s Fourth-Quarter GDP Drops 1.3% From Third Quarter

Portugal’s economy shrank for a fifth quarter in the three months through December as the government cuts spending and raises taxes to narrow its budget deficit.

Gross domestic product dropped 1.3 percent from the third quarter, when it fell 0.6 percent, the Lisbon-based National Statistics Institute said in a preliminary report today. Economists predicted a decline of 1.5 percent, the median of eight estimates in a Bloomberg survey showed. GDP dropped 2.7 percent from a year earlier.

Prime Minister Pedro Passos Coelho is facing a recession as he cuts spending and increases taxes to meet the terms of a 78 billion-euro aid plan from the European Union and the International Monetary Fund. As the country’s borrowing costs surged, Portugal followed Greece and Ireland in April in seeking a bailout.

To contact the reporter on this story: Joao Lima in Lisbon at jlima1@bloomberg.net

To contact the editor responsible for this story: Tim Quinson at tquinson@bloomberg.net

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