Lisbon (AFP)
The health crisis will cause Portugal an economic recession of 6.9% and the unemployment rate should reach 9.6%, according to forecasts included by the government in the supplementary budget which it must adopt on Tuesday in the Council of Ministers.
The new macroeconomic scenario was revealed in the decree, published Saturday evening in the official journal, detailing the measures of an "Economic and social stabilization program" adopted last Thursday to help the households and businesses most affected by the impact of the coronavirus epidemic.
"In 2020, we anticipate a sharp contraction in the Portuguese economy due to the economic shock caused by the Covid-19 disease pandemic and the restraint measures implemented," said the document.
The decline in GDP, estimated at 6.9% after growth of 2.2% in 2019, will represent "the largest contraction recorded in recent decades," said the text.
After the 2.3% drop in GDP already observed in the first quarter, the negative effect of the pandemic on economic activity will be felt "mainly in the second quarter of 2020", the government estimates.
The socialist executive forecasts a resumption of growth of 4.3% in 2021.
This year, exports will fall by 15.4%, investment will fall by 12.2% and household consumption will drop by 4.3%, while public spending will increase by 3.1%.
The unemployment rate should grow to 9.6%, against 6.5% last year, still according to forecasts accompanying the stabilization program framing the government's response until the end of the year.
These forecasts did not include the estimate of the public deficit for 2020, but it should be "between 6 and 7%" of GDP, said Friday the Minister of Finance Mario Centeno, in an interview with public radio Antena 1.
In 2019, Portugal had posted a budget surplus of 0.2% of GDP, a historic result for a country which had to undergo a severe austerity course to overcome the debt crisis that hit it in 2011.
© 2020 AFP