Portugal: Unemployment to reach double digits

Portugal is in the midst of a deep recession as the collapse of external demand and tight financial conditions have affected all parts of the economy, particularly exports and investment. Activity is expected to contract throughout 2009, before recovering very slowly in 2010 as the global economy and financial conditions gradually improve.

The unemployment rate is set to reach double digits. Sharply lower commodity prices and the large negative output gap will leave inflation at very low levels.

The fiscal position will deteriorate significantly in 2009 reflecting weaker economic conditions, lower revenues, and spending rises to support the economy. Fiscal consolidation and structural reforms will be required in the medium term to enhance growth prospects, reduce long-term unemployment and help place the public finances on a more sustainable footing.

Click here to see all OECD Observer articles on Portugal

See also www.oecd.org/portugal

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©OECD Observer No 274, July 2009




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