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Portugal sees 1.2% growth in 2014

Portugal’s government on Friday hoisted its forecast for economic growth this year to 1.2 percent from the 0.8 percent it had previously given.

“This new estimate is a lot better than what was predicted up to now,” Deputy Prime Minister Paulo Portas told a news conference as he presented the results of the latest visit by representatives from Portugal’s troika of creditors, the IMF, the EU and the European Central Bank.

The European Commission, however, in its latest economic forecasts for the 18-member eurozone on Tuesday, kept Portugal’s growth forecast this year pegged at 0.8 percent, with the prospect of 1.5 percent next year.

Portugal’s government said the troika was satisfied with the progress of austerity policies to rein in debt.

That should open the way for the struggling EU country to receive the next, 2.5-billion-euro ($3.5 billion) tranche of its 78 billion euro bailout which is due to expire in May.

The Portuguese economy emerged from recession last year and unemployment has begun to fall from record levels as the government has worked to squeeze down the country’s public deficit.

Despite Portugal’s efforts the main ratings agencies still classify the country’s bonds as junk.

Portugal has been living under the strict rules of the rescue programme agreed in May 2011 with the European Union, the International Monetary Fund and the European Central Bank.

In exchange for rescue loans, Portugal agreed to push through austerity measures and deep reforms that have sparked recession, pushed up unemployment — and encountered increasing resistance from unions and voters.

Prime Minister Passos Coelho said Portugal would “enter into a new phase” after the bailout package expires on May 17.

“This new phase will not signify a return to fiscal indiscipline, to a loss of competitiveness, to the accumulation of debt and of economic stagnation,” he said during a speech at a conference in Madrid on the future of the European Union.

“Portugal has experienced with great suffering where that path leads us. Believe me the Portuguese know very well the price we pay for irresponsibility and shortsightedness in political choices. We say no to irresponsibility.”

Portugal’s international creditors on Wednesday called on all parties and citizens in the country to back austerity measures for “a few more years” after its financial bailout package ends.

The troika representatives arrived Wednesday in Lisbon to look at the country’s accounts before it leaves the programme.