Portuguese economy contracts 3.2% in 2012

The Portuguese economy contracted by 1.8 percent in the final three months of 2012, and by 3.2 percent for the year as a whole, final data released on Monday showed, as exports declined and households curbed their spending.

The figures, which confirmed an initial estimate last month by the national statistics institute Ine, underscored that the struggling eurozone member remained in recession following an annualised drop of 1.6 percent in gross domestic product (GDP) in 2011.

“The sharper decline in 2012 GDP was the combined result… of a slowdown in exports of goods and services… and a more intense fall in private consumption,” Ine said.

Portuguese exports grew by 3.3 percent last year, a pace that was much slower than in 2011, when they had expanded by 7.2 percent.

Imports fell by 6.9 percent compared with a slide of 5.9 percent in 2011.

Domestic consumption contracted by 6.8 percent, adding to a decline of 5.8 percent in 2011.

Public spending declined by 4.4 percent last year, while investment plunged by 13.7 percent.

In the last three months of 2012, Portuguese business activity declined by 3.8 percent compared with the same period in 2011, and both the government and central bank have forecast a further drop of around 2.0 percent for this year as a whole.

Portugal has received international financial aid since May 2011, in return for reforms and austerity measures that have dampened economic activity while the government sorts out its finances.

The reforms have also affected the labour market, and at the end of 2012, Portuguese unemployment reached a record 16.9 percent of the workforce.