Portugal Beats Recession with Export-Led Growth
Bailed-out Portugal broke free from recession in the second quarter, data showed on Wednesday, as the government struggles to restore market confidence by pushing through deeply unpopular austerity reforms.
After shrinking for 10 months in a row, gross domestic product grew by 1.1 percent in the second quarter from output in the first quarter, but shrank by 2.0 percent on a 12-month basis, national statistics office Ine said.
The 12-month contraction was a big improvement, being half the shrinkage in the first quarter.
Ine said the better-than-expected quarterly growth was the first recorded by Portugal in two years and reflects "significant acceleration of exports of goods and services".
In April, exports surged by 16.0 percent and in May by 5.0 percent, on a 12-month basis.
In Europe, all bailed-out countries, as well as Spain, Italy and France and some countries in central Europe, are struggling to get a much bigger contribution from exports to help them return to growth and support public deficits.
Bailed out by the International Monetary Fund and European Union in May 2011, Portugal has had to enact a series of austerity reforms to get its finances in check to be able to return fully to the bond market when the 78-billion-euro ($104 million) debt-rescue program ends in June next year.
The depth of the reforms provoked a political crisis recently which nearly brought down the coalition government and put the rescue-reform programme at risk.
The country was rescued because it could no longer borrow sufficiently at high rates demanded on the eurozone bond market, but it never withdrew entirely from the market for short-term funding.
The growth, and particularly the rise in exports, are positive signs for Prime Minister Pedro Passos Coelho's coalition government.
But it has become increasingly unpopular by announcing massive job-cuts and tax rises and extending the working hours for civil servants, and analysts warn against pinning undue hope on the latest figures.
"It is still too early to talk about a turnaround of the economic cycle," the Catolica-Lisbon School of Business and Economics said in a commentary.
In the first quarter, the Portuguese economy had shrunk by 0.4 percent from output in the last quarter of last year and by 4.1 percent on a 12-month comparison.
Source: Agence France Presse
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