Portugal slipped back into recession in the first quarter when the economy shrank by 0.7%, official statistics showed today, as the country battles a debt crisis.
In the last quarter of last year the economy shrank by an upwardly revised 0.6%. A recession is two quarters in a row of contraction from output in the previous quarter.
Analysts had widely expected the latest contraction owing to government austerity measures put in place in January in a bid to slash public deficit at 9.1% of GDP in 2010 and 10% in 2009.
Portugal slipped back into a recession after emerging from a slump in 2009. Lisbon slashed wages and raised taxes in exchange for a EU-IMF €78 billion bail-out over three years that was announced this year.
Finance Minister Fernando Teixeira dos Santos earlier warned that the bailout programme would cause the economy to contract in 2011-2012 before growth picks up in 2013.
