Portuguese economy shrinks 0.6%

The Portuguese economy shrank a revised 0.6 percent in the first quarter after a similar contraction in the last three months of 2010 as consumption slumped, official data showed on Thursday.

Initial data in May put the first quarter shrinkage at 0.7 percent.

Thursday’s final figures showed that the economy also shrank 0.6 percent in the first quarter compared with the same period in 2010.

The downturn reflected above all “a sharp fall in consumer spending,” statistics institute INE said.

At the same time, it noted that “net external demand remained positive due a pick up in exports,” INE added.

INE said exports in April rose 15.1 percent from a year earlier to 3.41 billion euros ($5.0 billion), while exports gained 9.6 percent to 4.91 billion euros, giving a trade deficit of 1.50 billion euros.

Compared with March, April exports were down 9.3 percent while imports fell 8.9 percent.

The EU and the International Monetary Fund, which bailed out Portugal earlier this year, forecast the economy to shrink 2.2 percent this year and 1.8 percent in 2012.

Lisbon has been forced to adopt tough austerity measures in an effort to stabilise the public finances, dampening domestic consumption in the process.

Separate figures on inflation showed a slowing trend too as the economy cooled, with consumer prices in May rising 3.8 percent compared with a year earlier after a gain of 4.1 percent in April.

Month-on-month, May prices fell 0.1 percent.