Portugal contracts by 1.5% in 2011: official data

The Portuguese economy contracted by 1.5 percent in 2011 and 1.3 percent from the previous quarter in the first three months of 2012, provisional data from the INE statistics institute said on Tuesday.

The drop in gross domestic product was slightly less steep than a 1.6 percent contraction for 2011 forecast by the Portuguese central bank.

INE said that Portugal contracted by 2.7 percent in the fourth quarter on an annualised basis.

“The drop in GDP in the fourth quarter reflects significantly worse internal and household demand,” INE said in a statement.

The poor data comes as officials from the so-called ‘troika’ of the European Union, European Central Bank and the International Monetary Fund begin Wednesday a two-week review of the economy, checking Portugal’s progress since a 78 billion euro ($103 billion) bailout in 2011.

Lisbon received the bailout in return for a series of tough austerity measures to slash public spending and increase revenues.

The austerity programmes have however slowed the economy and in recent weeks speculation has grown that Portugal may need more help, driving its borrowing costs sharply higher.