Portugal's economic recession to extend into next year: IMF

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The economic recession in Portugal was set to extend into next year, reflecting a slowdown in economic activity in the eurozone as well as fiscal drag from additional consolidation that was now needed, the International Monetary Fund (IMF) said on Thursday.

In a report reviewing Portugal's economic performance released on Thursday, the Washington-based IMF warned that the nation's economic output was likely to contract by around 1 percent next year.

"The risks to the macroeconomic outlook and fiscal targets are significant and tilted to the downside," noted the report.

The public debt of the nation was expected to peak at close to 124 percent of its gross domestic product (GDP) in 2014, and the level was forecast to decline steadily, said the global lender.

The IMF announced on Wednesday that it released a tranche of rescue funding in the amount of 1.259 billion special drawing rights (SDRs), or about 1.5 billion euros (about 1.95 billion U.S. dollars), to Portugal after the latest review of the nation's economic performance.

Portugal in May 2011 inked a 78-billion-euro international rescue program over three years with the IMF and its European partners to tide over its economic crisis.

The economic program has entered a more challenging phase. "An improvement in the broader euro area economic environment will be critical to the program's success," said the IMF.

The nation's financial sector has remained stable, and a range of essential labor and product market reforms to enhance competitiveness have been put in place. However, "with the program approaching its mid-point, few easy adjustment options remain", cautioned the IMF. Endit

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