Portugal sees economy shrinking 2.3% in 2011, 1.7% in 2012

Bailed-out Portugal will see its economy shrink 2.3 percent this year and 1.7 percent in 2012, with a recovery only coming in 2013, Finance Minister Vitor Gaspar said Thursday.

The International Monetary Fund and the European Union which bailed out debt-stricken Portugal earlier this year, based their help on forecasts for a contraction of 2.2 percent in 2011 and 1.8 percent in 2012.

“The economic recovery will only occur in 2013,” Gaspar told a press conference.

The government expects domestic demand to shrink 5.8 percent this year and 4.1 percent in 2012.

Exports, a crucial growth driver, should increase 6.7 percent and 5.6 percent, while imports are estimated to fall 4.8 percent and 1.3 percent.

Unemployment will hit 12.5 percent this year and 13.2 percent in 2012.

Earlier this week, the central bank said the economy would shrink 2.0 percent in 2011 and a further 1.8 percent next year.