• Portugal will put recession behind it this year with 0.75 per cent growth, although the recovery will be less strong than previously thought, according to the Bank of Portugal. “The weak growth predicted for 2004 is fundamentally due to another expected moderate decline in internal demand,” a bank spokesman revealed.
Last June the bank estimated that the economy would grow one per cent this year, after a contraction of about one per cent in 2003. The spokesman went on to explain that the bank’s calculations were based on the belief that domestic demand would drop between 0.5 and one per cent this year, as government spending cuts and low consumer confidence, caused by rising unemployment, continue to take their toll.
This fall in domestic demand was illustrated recently by ANECRA, the national association of car dealers, which reported that sales of new cars had plunged by more than 15 per cent in 2003 compared to the previous year, the lowest level in 14 years. But the bank believes that the fall in domestic demand will be offset by a sharp rise in exports caused by recovery in the global economy.
“The upturn in the world economy and the European economy in particular were definitely confirmed at the end of 2003, and they should go forward this year, which explains the assumptions for growth which were adopted,” commented the spokesman.
The bank predicts that exports will grow by between 4.75 and 6.75 per cent this year, after rising three per cent last year. Looking ahead to 2005, exports are predictedto rise to between six and nine per cent, helping economic growth to pick up to 1.75 per cent.
Other predictions from the bank include the fact that, despite the improved economic outlook, unemployment, which stood at 6.3 per cent of the workforce in the third quarter of 2003, will continue to rise this year, before stabilising in 2005. However, inflation will drop to between two to three per cent this year, from 3.3 per cent in 2003.
On a less optimistic note, the Organisation for Economic Cooperation and Development estimates that the Portuguese economy contracted by 0.8 per cent last year, meaning Portugal gave the worst economic performance of the OECD’s 30 members.
• Trading volumes on Portugal’s regulated exchanges rose 16 per cent in 2003, driven mainly by gains in the MEDIP bond market and trading in warrants and other derivatives. The CMVM said trading volume in December alone rose 7.6 per cent to 14.8bn euros from November, driven mainly by activity on MEDIP. Over the full year, volume was 169.3bn euros, up from 145.8bn euros in full-year 2002.
• Volkswagen has signed an investment deal worth 600m euros by 2011 to upgrade its Portuguese multipurpose vehicle plant. Speaking at the signing ceremony, Economy Minister Carlos Tavares said 440m euros was earmarked for spending at the Autoeuropa plant in Palmela in 2004.
• TAP finished 2003 with a profit of more than 10m euros, after four years of losses. The profits are expected to be near the target of 12m in 2004, but it wasn’t clear how much would come from one-off items.
• Arriva has announced it is looking to mainland Europe in 2004 for expansion in its trains business. Arriva’s CEO, Bob Davies, has signalled that the company is actively seeking opportunities to run trains in Germany – Europe’s biggest transport market and an increasingly de-regulated arena. The company is also considering Portugal and Italy for more growth, as both countries’ governments are said to be looking at opening up their markets to competition.
• Brisa raised its tolls by an average of 2.8 per cent on January 1, keeping with legally permitted annual increases. In a statement, Brisa added it would invest 400m in 2004 in building, widening and improving toll roads in 2004.
• Vodafone Telecel, the Portuguese unit of Vodafone Group PLC, said it has launched a third-generation UMTS mobile phone service. The service will initially cover only Lisbon and Porto, with a restricted number of users, including Vodafone employees, plus selected partners and subscribers.
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