LISBON: Portugal’s economy grew less than expected in the second quarter, expanding just 0.2 per cent from the previous quarter. This was below economist forecasts of 0.3 per cent growth for the three months to June, but was in line with the rate of growth seen in the first quarter.
Year-on-year, Portuguese GDP grew 0.8 per cent, falling short of forecasts of 1 per cent growth and slipping from the 0.9 per cent expansion seen in the previous quarter. Portugal’s Socialist party prime minister António Costa toppled the more fiscally conservative government led by Pedro Passos Coelho last November, just a few weeks after elections.
The new government’s looser spending plans, including a faster reversal of state salary cuts enacted during the crisis, have already come up against resistance from eurozone policymakers for infringing fiscal targets. Earlier this week Portugal, along with Spain, avoided becoming the first EU member states to be fined for budgetary failings as the European Council confirmed it was cancelling sanctions on the two countries. Portugal suffered eleven consecutive quarters of year on year economic contraction from 2011 to 2013, but has since racked up eleven straight quarters of year on year growth. However, since clocking a decent annual growth rate of 1.7 per cent in the first quarter of 2015, expansion has slowed in every quarter since.
