LISBON, Portugal (AP) — Portugal's economy shrank 1.6 percent last year as austerity measures adopted in return for a euro78 billion ($103 billion) bailout took their toll, the national statistics agency said Friday.
The return to recession was slightly worse than the National Statistics Institute's previous forecast of a 1.5 percent contraction and came as the country enacted tax increases and spending cuts to meet the demands of its international creditors.
Last May, Portugal became the third country in the 17-country eurozone, after Greece and Ireland, to need a financial rescue to avoid bankruptcy.
Portugal's debt burden mushroomed after a decade of average growth of below 1 percent. Reform measures accompanying the austerity are designed to push the country's growth levels higher.
However, the government is predicting a contraction of 3.3 percent this year, triggering fears the country will need more financial aid from its European partners and the International Monetary Fund.
Despite the recession, which has pushed unemployment up to 14.8 percent, and numerous strikes and protests, the government says it will stick with the debt-reducing austerity program.
Portugal is one of the eurozone's smallest economies, representing less than 2 percent of the bloc's gross domestic product. GDP last year amounted to euro171.1 billion ($226 billion), the statistics agency said.
Investment dropped 14 percent in 2011 while domestic demand fell by 6.2 percent on the previous year, the agency said.
The slowdown gathered pace in the fourth quarter of last year as growth in the rest of Europe also waned.
Around 75 percent of Portuguese exports go to other European Union countries.
The Portuguese economy contracted 2.8 percent in the last quarter compared with the same period in 2010, and domestic demand plunged 9.5 percent in the same period.
Exports over the year were 7.4 percent up on 2010 but grew just 5.5 percent in the last three months of last year.
yahoo.com
The return to recession was slightly worse than the National Statistics Institute's previous forecast of a 1.5 percent contraction and came as the country enacted tax increases and spending cuts to meet the demands of its international creditors.
Last May, Portugal became the third country in the 17-country eurozone, after Greece and Ireland, to need a financial rescue to avoid bankruptcy.
Portugal's debt burden mushroomed after a decade of average growth of below 1 percent. Reform measures accompanying the austerity are designed to push the country's growth levels higher.
However, the government is predicting a contraction of 3.3 percent this year, triggering fears the country will need more financial aid from its European partners and the International Monetary Fund.
Despite the recession, which has pushed unemployment up to 14.8 percent, and numerous strikes and protests, the government says it will stick with the debt-reducing austerity program.
Portugal is one of the eurozone's smallest economies, representing less than 2 percent of the bloc's gross domestic product. GDP last year amounted to euro171.1 billion ($226 billion), the statistics agency said.
Investment dropped 14 percent in 2011 while domestic demand fell by 6.2 percent on the previous year, the agency said.
The slowdown gathered pace in the fourth quarter of last year as growth in the rest of Europe also waned.
Around 75 percent of Portuguese exports go to other European Union countries.
The Portuguese economy contracted 2.8 percent in the last quarter compared with the same period in 2010, and domestic demand plunged 9.5 percent in the same period.
Exports over the year were 7.4 percent up on 2010 but grew just 5.5 percent in the last three months of last year.
yahoo.com
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