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Portugal to return to growth in 2013: minister

Published on 31/08/2011

Bailed-out Portugal, struggling to get out of a deep recession and restore its debt-strained public finances, will return to growth in 2013 at 1.2 percent, Finance Minister Vitor Gaspar said Wednesday.

“The economy should begin growing in 2013 thanks to a recovery in domestic demand … a correction of macro-economic instability and a continued pick-up in exports,” Gaspar told a news conference.

The Portugese economy is expected to shrink 2.2 percent this year and 1.8 percent in 2012, in part due to the tough austerity measures it has had to take as part of its 78 billion euros debt rescue agreed earlier this year with the European Union and International Monetary Fund.

With the country returning to growth, Gaspar said the annual budget deficit should fall to 0.5 percent of Gross Domestic Product by 2015, well below the EU limit of 3.0 percent.

“In five years, the Portuguese economy will have virtually eliminated its budget imbalances,” he said.

Under the bailout accord, Lisbon is supposed to bring its budget deficit down to 5.9 percent of GDP this year from 9.1 percent in 2010.

Unemployment will remain high, hitting 13.2 percent in 2012 before falling back to 12.3 percent in 2015, compared with 12.5 percent this year.

The government put total accumulated debt at 106.8 percent of GDP in 2013, improving to 101.8 percent by 2015, compared with the current 100.8 percent and the EU limit of 60 percent.

Gaspar also announced additional measures to help the government balance the books, with civil servant posts to be cut by 2.0 percent a year in the 2012-14 period, up from the initially planned 1.0 percent.