LISBON (MNI) – The Bank of Portugal on Thursday revised up its
projection for Portugal’s GDP growth this year to +1.2% from +0.9%
expected in July but trimmed its forecast for 2011 to flat from +0.2%.

Fiscal consolidation measures taken by the government will have a
contractionary impact on economic activity in the short term, the
central bank said in its quarterly Economic Bulletin.

This year’s improved economic prospects stem from stronger private
and public consumption than expected in July. Private consumption is now
seen growing by 1.8% vs 1.3%, while public consumption is seen rising
1.5% vs
down 0.9%. This would offset weaker fixed investment and a smaller boost
from foreign trade.

Next year, investment is now seen falling 3.2% vs -1.6% expected
previously. The downturn in private consumption would be slightly less
pronounced at 0.8% vs 0.9%.

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