Portugal: Recession raises second bailout fears
24 February 2012
"Portuguese GDP forecast reinforces new bailout scenario", warns Público, the day after the European Commission predicted that Portugal will experience the second worst economic performance in the EU in 2012 – only surpassed by Greece. While the Portuguese government forecasts a 3% decline in GDP, Brussels goes further with 3.3%, in a macroeconomic climate full of "uncertainties".
Economists speaking to the Lisbon daily believe that unemployment, currently at 14%, will continue to rise, and "with a growing recession, a new bailout will be inevitable. It’s just a matter of time,” said one. Another gloomily adds that forecasts are -
... confirmation that austerity measures are not working, that they are destructive and that recession will be inevitable and long. [...] A bailout programme wrapped in recession creates itself the impossibility of a solution. I fear that the need for outside help will become a cumulative and recurrent problem.
The Brussels forecast comes as experts from the ECB/EU/IMF are in Portugal studying its compliance with the €78 billion bailout package of May 2011. In an angry editorial, Público warns that -
In the absence of a different European approach to the Portuguese problem (and the Spanish, Italian, or Greek one), this sharp fall in gross domestic product is a sentence without appeal. And as we can see no significant change in the priorities of the Merkozy axis towards the debt crisis, the country must be prepared to gnash its teeth even more, to watch ever faster destruction of jobs and further deep degradation of the economy. (...) As Brussels revealed yesterday, the troika`s solution threatens to lead the country to the abyss even before the reforms take place.