Portugese central bank forecasts deeper 2013 recession

LISBON (AFP) - The Portuguese economy is likely to contract by 1.6 per cent next year, according to a new central bank estimate that is more pessimistic than those made by the government or the country's international creditors.

"In 2012 and 2013, we should see a decline in economic activity of 3.0 per cent and 1.6 per cent respectively," the bank said in a statement.

The government and its international creditors, the European Union (EU) and the International Monetary Fund (IMF), have forecast that gross domestic product would shrink by 3.0 per cent this year and by 1.0 per cent next year.

Portugal is benefiting from a financial rescue package worth 78 billion euros (S$124 billion) that it agreed upon with the EU and IMF in May 2011.