The Star Malaysia - Star2

Worst slump since 1936


PORTUGAL last year recorded its steepest economic contractio­n since 1936 as both domestic and external demand weakened due to the Covid-19 pandemic, especially in tourism.

Gross Domestic Product fell 7.6% in 2020, the National Statistics Institute (INE) data showed, almost double the 4.1% fall in 2012 during an austerity programme linked to an internatio­nal bailout.

“Domestic demand presented a significan­t negative contributi­on to the annual rate of change of GDP, mainly due to the decrease of private consumptio­n,” INE said.

“The contributi­on of net external demand was more negative in 2020, mainly reflecting the unpreceden­ted reduction of tourism exports.” Tourism accounts for 15% of GDP.

INE revised down growth in the last three months of the year to 0.2% from its flash estimate of 0.4%. That was sharply down from the third quarter’s 13.3% growth.

In its second GDP reading for the quarter, INE also said the economy contracted 6.1% from a year earlier, revising its flash estimate of a 5.9% decrease.

The government has projected a 5.4% rebound this year but the finance ministry has already warned that the current nationwide lockdown will have a negative impact in the first months of 2021.

Portugal imposed a night-time curfew and partial weekend lockdown in early November and tightened curbs in mid-january as the pandemic worsened.

Recently, it saw another nationwide lockdown extended until at least midmarch but its president told the government to put together a plan to gradually lift the strict rules.

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