Portugal's recession deepens

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Portugal's recession deepens

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Portugal’s economy is in an even worse state than was previously thought.

The latest revised statistics show GDP shrank by 0.6 percent between July and September from the previous quarter.

It was dragged deeper into recession by austerity and financing problems amid the debt crisis while export growth slowed.

The National Statistics Institute’s (INE) second reading of GDP showed a sharper quarter-on-quarter contraction than the flash estimate of minus 0.4 percent.

GDP contracted by 0.2 percent in the second quarter and 0.6 percent in the first quarter of this year, INE said.

INE said that year-on-year GDP fell 1.7 percent, the same as in its flash estimate, after a contraction of 1 percent in the previous quarter.

Parliament approved last week a tough 2012 budget that suspends holiday and year-end bonuses for civil servants and hikes many taxes further.

The Lisbon government hopes for a recovery by late next year mainly through exports.

But many economists warn Europe’s economic slowdown will hamper Portugal’s return to growth and meet its 2012 budget deficit target under the bailout. It has to slash the gap to 4.5 percent next year from this year’s projected 5.9 percent.