Portugal sees worsening growth outlook for 2012

The Portugese economy could contract by a more than anticipated 2.5 percent of gross domestic product next year because of a far gloomier global economic outlook, State Secretary Carlos Moedas told TSF radio on Tuesday.

Moedas, who is tasked with putting into action a rescue programme set up by the European Union and International Monetary Fund, said “international uncertainty could provoke a deeper than expected recession.”

“Against this uncertainty, the scenarios have to be of course modified. Not because we are not doing what we need to do, but because of the international situation,” Moedas said.

In return for 78 billion euros ($105 billion) in rescue loans, Portugal agreed last May to implement austerity measures and economic reforms aimed at reducing a mountain of debt and stimulating growth.

Portugal’s prime minister said on Saturday he anticipated better than expected economic performance in 2011, but that the outlook for 2012 was gloomier than previously forecast.

In an interview with Dow Jones newswires, Pedro Passos Coelho said that Portugal’s economy would contract by 1.8 percent in 2011, better than the previously estimated contraction of 2.2 percent.

He said he expected a 2.3 percent contraction in 2012, worse than the 1.8 percent contraction that had been predicted.

Coelho said he expected a return to positive growth in 2013, at 1.2 percent.

Portugal has promised to abide by reforms demanded by its creditors, and Portugal has already passed a wave of measures including a hike in transport prices, increased taxes on gas and electricity and cutbacks in the public work force.

Earlier this month, Portugal unveiled plans for a slimmed-down central administration with the axing of 27 percent of directors’ posts.

The plan, which proposes a saving of 100 million euros next year, includes the axing of 1,700 managerial posts from the state administration and 137 public companies.