PORTUGAL WILL be especially vulnerable to a prolonged four-year world recession which could see the country lose over 20 per cent of its GDP by 2012.
According to International Monetary Fund (IMF) reports, Portugal has the highest external debt for a country of its size in Europe while its people are the most indebted in terms of credit loans for cars, furniture, holidays and other consumer items.
By 2009, Portugal’s external deficit is on target to reach 11 per cent of her GDP – the highest since 1982.
The IMF also concluded that countries like Portugal were spending a whopping 12 per cent of their annual GDP propping up the liquidity-short banking system, which would only increase the national debt.
Friday last week was the 79th anniversary of the famous Wall Street Crash in the United States of America, but despite injections of liquidity from the European Central Bank and the Federal Reserve, fears of recession and a bumpy week on the Far Eastern stock markets sent Lisbon PSI20 crashing again with accumulated losses for 2008 reaching 54.2 per cent.
The Portuguese stock market (Bolsa de Valores) fell 5.63 per cent at the close of trade on Friday to 5.966 points – the lowest level since 2003.
Most Portuguese companies today are worth less than a half of what they were worth 12 months ago with Sonae leading the falls by a massive 73.2 per cent, BPI bank losing 67.9 per cent and Millennium BPC 65.6 per cent. For anyone with spare cash floating around they can afford to part with, now is a good time to buy up these shares.
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