Exports slump as economy shrinks by 2%

The recession is affecting Portugal more than expected, with revised figures showing the economy contracted by two per cent in the last quarter of 2008.

With the country’s GDP plummeting by 2.1 per cent compared with an average of 1.2 per cent in the Eurozone, and exports in freefall as demand from other countries slumps, the outlook for 2009 is bleaker than analysts had first thought.

According to Paula Carvalho, analyst at BPI bank, “with each month that has gone by the economy has got worse and I believe that the trend will continue for some months in 2009.”

José Silva Lopes, a former finance minister, told the news agency Lusa that “all predictions, including those of the Bank of Portugal, are off the mark and now all the signs point to a growth rate of -2 per cent”.

The Minister of employment and Social Security, Vieira da Silva, called on companies to not lay off staff in mass and said it was better to keep them on part-time on reduced salary until the situation improved.

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