Portugal sees worst recession in 37 years

Monday 11 March 2013 16.06
Portugal's economy contracted by 3.2% in 2012
Portugal's economy contracted by 3.2% in 2012

Portugal's statistics agency said today that the economy contracted 3.2% last year - its sharpest annual downturn since 1975.

Portugal is enacting broad debt-reduction measures, including tax hikes and pay and pension cuts, in return for a €78 billion international financial lifeline it received in May 2011.

Those austerity policies are widely blamed for the deepening recession and growing hardship.

The National Statistics Institute said a drop in private consumption and slower export growth were the main factors behind the slump, with the economy shrinking 3.8% in the fourth quarter.

Unemployment stands at 17.6%, the third-highest rate in the 27-nation bloc after Greece and Spain.

Portugal's economy contracted 1.6% in 2011 and the government had predicted a 2% contraction this year.

Unemployment stands at 17.6%, the third-highest rate in the 27-nation bloc after Greece and Spain.

Portugal's economy contracted 1.6% in 2011 and the government had predicted a 2% contraction this year.