Portugal growth officially stalls in second quarter

The Portuguese economy stalled in the second quarter compared to the previous three months and shrank by 0.9 percent year-on-year, INE, Portugal’s national statistics agency said on Wednesday.

In the April-June period, domestic demand fell by 1.3 percent from the previous quarter and 5.2 percent annually due to a 12.5 percent annual drop in investment, INE said.

Exports grew by 4.0 percent in the period and imports dropped by 0.2 percent, the agency said.

INE confirmed the economy shrank by a 0.5 percent in the last quarter of 2010 and 0.6 percent in the first quarter of 2011.

The Portuguese government forecasts a 2.2-percent recession for 2011 and a 1.8 contraction for 2012. It forecasts a return to growth in 2013.

Lisbon has been forced to adopt tough austerity measures in an effort to stabilise the public finances, dampening domestic consumption in the process.