Portugal sees worsening economic outlook for 2012

Portugal’s economy is expected to shrink by 3.0 percent in 2012, a bleaker outlook than the previous estimate of 2.8 percent, the country’s finance minister said Monday.

The new forecast tallies with that of the European Commission.

Finance Minister Vitor Gaspar, however, said this year’s recession would be slightly less severe than initially forecast, with a contraction of 1.6 percent instead of a predicted 1.9 percent.

Gaspar told colleagues in parliament to expect “…a better economic performance in 2011 but a greater downturn in 2012.”

The revised assessment follows newly released figures from Portugal’s national statistics department.

Portugal has seen its GDP drop since the last quarter of 2010. Its economy contracted by 0.4 percent in the third quarter of 2011.

The revised numbers should have no significant impact on the 2012 budget, however, Gaspar added.

On November 11, Portuguese politicians approved in the first reading a budget that would impose dramatic cuts beyond even those recommended by the International Monetary Fund and the EU, which have given the country emergency loans. The final vote is set for November 30.

After Ireland and Greece, Portugal is the third country in the eurozone to receive a bailout, with a 78-billion-euro ($105 billion) loan package to be disbursed provided Lisbon implements austerity measures.