Portugal sees brighter economic outlook

March 02, 2014 - 1:19:16 am
LISBON: Portugal passed the penultimate review of its fiscal and economic performance under an EU/IMF bailout, and the government raised its forecast for economic growth in an encouraging sign for the country’s post-bailout future.

The economy is now expected to grow 1.2 percent this year, up from the previous projection of 0.8 percent growth. Portuguese GDP began to recover from its worst recession since the 1970s last year, but it has yet to register a full year of growth.

“Portugal ends the eleventh evaluation in a positive fashion and this is important ... because now there is only one review left to conclude our programme with the ‘troika’” of lenders, Deputy Prime Minister Paulo Portas told reporters. “The revision of the macroeconomic setting points to a year with more growth, jobs, exports and investment,” he said.

Lisbon should exit the ¤78bn bailout programme in May, but it still has to meet a budget deficit target of four percent of GDP this year and 2.5 percent in 2015. It met 2013’s 5.5 percent target with some room to spare, officials said.

In a statement, the lenders from the European Commission, European Central Bank and the International Monetary Fund said, “led by investment and exports, economic growth is somewhat ahead of projections, employment is increasing” and the jobless rate is declining from very high levels.

The government also revised its unemployment forecast for this year to 15.7 percent from 16.8 percent, which means the jobless rate peaked last year at 16.3 percent.

The positive review means Portugal should get a ¤2.5bn tranche from the lenders who nevertheless called on Lisbon to deepen structural reforms.