Gross domestic product will shrink 1.9 percent in 2013 after declining an estimated 3 percent in 2012, the Lisbon-based Bank of Portugal said today in its winter economic bulletin. In November, the bank forecast a contraction of 1.6 percent for 2013. It projects growth of 1.3% in 2014.
“The outlook for the Portuguese economy in 2013 and 2014 continues to be marked by the process of adjustment of the structural macroeconomic imbalances, including the short-run impact of fiscal consolidation measures, as well as tight financing conditions,” the central bank said in a statement.
Prime Minister Pedro Passos Coelho is battling rising joblessness and a deepening recession as he cuts spending and raises taxes to meet the terms of a 78 billion-euro ($104 billion) aid plan from the European Union and the International Monetary Fund. Portugal has already been given more time to narrow its budget shortfall after tax revenue missed forecasts.
To contact the reporter on this story: Joao Lima in Lisbon at firstname.lastname@example.org
To contact the editor responsible for this story: Stephen Foxwell at email@example.com