Compared to activity in the third quarter of 2011, the economy contracted by 3.5 percent INE said, revising its initial estimate of minus 3.4 percent.

Portugal is enacting deep budget and economic reforms as part of conditions for bailout loans last year from the International Monetary Fund and European Union.

INE said that the recession had increased in the third quarter owing to “a less marked reduction of imports of goods and services and a slowing of exports.”

But the fall of internal demand had had a less damaging effect on economic activity mainly because of a slight easing of a steep reduction of investment.

In the second quarter of the year, gross domestic product contracted by 1.0 percent on a seasonally adjusted basis, and by 3.1 percent on a 12-month comparison.

The economy has been shrinking since 2011 when it contracted by 1.7 percent. The government, the IMF and the EU expect the economy to contract again, by 1.0 percent, next year.

The bank of Portugal forecasts that the economy will shrink by 1.6 percent in 2013.