Output in the third quarter, on a 12-month comparison, fell 1.7 percent, after falling 1.0 percent in the three months to June, the national statistics institute Ine said.

Ine said of the worsening 12-month figures that “the sharper fall … in the third quarter is mainly the result of slow export growth, which stayed at a high level all the same, and of a more significant reduction in investment.”

Household consumption continued to show a sharp retreat, the office said.

For the whole of this year, the economy is set to contract by 1.9 percent, on the basis of estimates by the government and by the European Commission, in contrast to growth of 1.4 percent last year.

Portugal was bailed out in May this year by European Union and the International Monetary Fund to overcome its debt crisis.

The country has, under the accord, to make deep adjustments to its budget and reforms of its economy, with the government expecting a contraction of 2.8 percent next year.

The EU puts the 2012 shrinkage at 3.0 percent but then expects the economy to return to growth, at 1.1 percent, in 2013.