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Portugal sees sharper economic contraction on virus

Agence France-Presse
Portugal sees sharper economic contraction on virus

People wearing face masks walk in Lisbon, Portugal, on October 12, 2020. (Photo by PATRICIA DE MELO MOREIRA / AFP)


Portugal's finance ministry expects the country's gross domestic product to 'see its biggest fall since the war'

Portugal now expects its economy to shrink a record 8.5% this year due to the coronavirus pandemic, worse than its previous estimate of 6.9%, according to the government’s latest spending plans.

“Gross domestic product (GDP) will see its biggest fall since the war,” the finance ministry said in a statement late Monday, October 12.

However, the economy should bounce back strongly in 2021 with growth of 5.4%, up from the previous estimate of 4.3%.

Portugal also expects to do better on the public finances, with a budget deficit – the shortfall between spending and revenue – equal to 4.3% of GDP in 2021 compared with 7.3% this year.

Unemployment should fall from 8.7% this year to 8.2% next, according to the government’s plans.

The jobless rate stood at 6.5% in 2019 when the government managed to eke out a historic budget surplus of 0.1% of GDP.

This budget surplus was the first since democratic civilian rule was established in 1974 and it had been expected the public finances would continue in the black this year.

Like all governments however, Portugal’s has been forced to spend and borrow massively in an effort to keep the economy afloat during the coronavirus crisis. –

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