Portugal’s GDP May Grow More Than 1% This Year, Lima Says

Portugal’s economy may grow faster this year than the government forecast in October, Economy Minister Antonio Pires de Lima said.

“Confidence about the Portuguese growth in 2014 is a sentiment that is getting deeper in Portuguese society,” Pires de Lima said today in an interview in the country’s embassy in Madrid. “In the end it might be possible to grow more than 1 percent.”

Portugal is showing signs of recovery as it tries to regain full access to debt markets, with the end of its 78 billion-euro ($106 billion) rescue program from the European Union and International Monetary Fund approaching in May. The country sold 3.25 billion euros of five-year notes through banks this month, its first offering of coupon-bearing debt in eight months, helped by growing demand for Europe’s higher-yielding fixed-income assets.

The government on Oct. 3 raised its 2014 growth forecast to 0.8 percent from 0.6 percent. It estimated the economy would shrink 1.8 percent in 2013, though gross domestic product expanded in the second and third quarters last year.

An exit from the bailout program is not on the agenda of a Jan. 27 Eurogroup meeting of euro-area finance ministers, an official at Portugal’s Finance Ministry said today. The government considers it’s still too early to start discussing the strategy for exiting the aid program, the official said.

Irish Example

Ireland last month became the first nation to exit a rescue program since the euro area’s debt crisis began in 2009. That country entered its 67.5 billion-euro bailout in November 2010, six months before Portugal got its package.

Ireland completed its bailout plan without requesting a precautionary financing program. Portugal may or may not negotiate a precautionary credit line to exit the bailout program, Prime Minister Pedro Passos Coelho said on Dec. 18. “The Portuguese government does not stigmatize any of the possibilities,” he said.

“We should not anticipate a decision that has to be made at the right time,” said Pires de Lima. He pointed out that Ireland made its decision to forgo a credit line about a month before its bailout ended in December.

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