Despite the positive contribution of exports, which at-
tenuated an even more pronounced reduction of eco-
nomic activity, the sharp drop in private consumption
(-5.5%), public consumption (-4.5%) and investment
(-15.5%) pushed the country into its biggest recession
since 1975.
The Portuguese economy’s adjustment process will conti-
nue in 2013, with product estimated to fall by around 2.2%.
The budget consolidation effort will continue, especially
by means of revenues, with increased taxation of family
incomes.
The austerity policies together with the near absence of
public and private investment will continue to decisively
affect economic activity and increase the unemployment
rate. The latter should rise significantly, augmenting the
number of families who live below the poverty line.
The return to the financial markets of debt emission in
2013 has been a positive occurrence which may help cut
the productive sector’s financing costs. But the macroe-
conomic panorama is still very weak.
Situation in Spain
In 2012 the Spanish economy returned to a recession
panorama, with GDP falling by 1.3%; in 2013 the pace of
contraction may accelerate to 1.6%, with the economic
cycle’s lowest point reached in the first quarter.
Initial expectations of a moderate growth in econo-
mic activity in 2012 did not happen, basically due to
the negative behaviour of all the internal demand
components.
The cuts in Christmas bonuses for civil servants, redu-
cing family incomes, along with increased VAT and the
aggravated unemployment situation contributed to lo-
wer consumption.
The need to reduce the state deficit forced cuts in public
spending. Lower demand and uncertainty about an eco-
nomic upturn led to a paralysis of investment.
An entirely similar depression scenario is expected
in 2013, with exports maintained as the only positive
factor, with growth on the order of 4% (3.7% in 2012)
expected.
ANNUAL REPORT AND CONSOLIDATED ACCOUNTS 2012
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