–Adds Comments On The Impact Of Fiscal Measures On Growth
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%.
Addressing the fiscal and debt crisis, which is increasingly
affecting Portugal, the central bank noted that, “the pressure to adjust
will fall on all sectors of the economy simultaneously, generating a
severe and inescapable contractionary dynamic.”
Without “significant temporary measures,” the bank warned, the
country’s public deficit this year will be “clearly above the objective
initially outlined.”
Austerity measures announced last week, along with others that
might be needed will benefit the economy in the medium and long term,
but they will have a “contractionary impact in the short term, the Bank
of Portugal said.
[TOPICS: M$$EC$,M$X$$$,MT$$$$]
