Portugal’s economy shrinks 1.6% in 2011
Portugal's economy shrank by 1.6 percent in 2011, according to final figures released Friday by the INE statistics agency, as domestic demand reeled from austerity measures.
The economy contracted by 1.3 percent in the October-December period compared with the third quarter, or by 2.8 percent from the fourth quarter of 2010.
INE blamed the contraction in gross domestic product (GDP) “on a drop in internal demand which went from +0.9 percent in 2010 to -6.2 percent in 2011, associated mainly with a 3.6 percent reduction in household consumption.”
Portugal agreed to implement a series of spending cuts and tax hikes in exchange for a 78-billion-euro ($102 billion) bailout package from the European Union and International Monetary Fund in May 2011.
The austerity measures are expected to lead to a 3.3 percent contraction in GDP this year and push unemployment up to a record 14.6 percent.