Portugal PM slashes growth forecast

Portugal’s economy will grow by just over one percent this year, Prime Minister Antonio Costa said in an interview published Monday, lowering his government’s initial estimate of 1.8 percent growth.

“Everything indicates we will have growth above one percent,” he told daily newpspaper Publico, before adding that the expansion of the economy would not be “much greater than that”.

The government’s growth forecast for 2016 has up until now been higher than most major institutions.

The European Commission forecasts the Portuguese economy will expand by 1.5 percent this year while the International Monetary Fund sees it growing by just 1.3 percent.

Many analysts have warned that weak growth could affect the country’s fiscal consolidation.

Since coming to power in November 2015, Costa’s centre-left government which supported by the Left Bloc and Communist Party, has rolled back austerity measures taken after Portugal’s 78-billion-euro bailout in 2011.

Costa has insisted he will manage to bring the deficit down to below 2.5 percent of economic output this year and meet European Union commitments, down from 4.4 percent in 2015.

The government will table its draft 2017 budget to parliament later this month which will outline its new deficit and growth targets.