Portugal’s economy will contract 2.4 percent this year and shrink again next year, the Catholic University of Lisbon forecast.
Portugal’s economic recovery depends on its ability to export its products, NECEP/CEA, a unit of the Economics Faculty of Lisbon’s Catholic University, said in an e-mailed report today. “The sovereign debt crisis in the euro area will have a decisive impact on the trajectory of the Portuguese economy.”
The university forecasts a deeper recession than the government, which predicts the country’s economy will contract 2.3 percent this year before growing 0.6 percent next year.
The Catholic University forecasts Portugal’s economy will contract 0.4 percent next year.
Portugal’s government is cutting spending and raising taxes to meet the terms of a 78 billion-euro ($102 billion) aid plan from the European Union and the International Monetary Fund. As the country’s borrowing costs surged, Portugal followed Greece and Ireland in 2011 in seeking a bailout.