Portugal's GDP projected to drop 6.9 pct in 2020 due to pandemic

LISBON, June 7 (Xinhua) -- The Portuguese government estimated a 6.9-percent drop in GDP this year due to the economic crisis caused by the COVID-19 pandemic, according to its Economic and Social Stabilization Program, published in an extra edition of the Official Gazette Sunday.

The document projects the macroeconomic scenario for the years 2020-2021, in which it also foresees a 4.3-percent growth in GDP next year.

"For 2020, the perspective is for a strong contraction of the Portuguese economy, as a result of the economic shock caused by the COVID-19 pandemic and the containment measures implemented. In this context, an abrupt drop in the real GDP growth rate is expected to reach 6.9 percent, the biggest contraction in recent decades," said the document.

The government estimates that the impact will occur mainly in the second quarter of the year, "after the 2.3-percent drop registered in the first quarter of 2020."

According to the estimates, domestic demand is expected to fall 5.1 percentage points this year and rise 3.8 percentage points in 2021, while external demand is expected to drop 1.8 percentage points this year and rise 0.4 percentage points in 2021.

"For 2021, a significant recovery in GDP growth is projected through an increase in external and internal demand. Economic activity should recover to the levels recorded before the pandemic, with the exception of some sectors of the economy, such as tourism," said the government.

The government also forecast an unemployment rate this year of 9.6 percent and 8.7 percent in 2021.

Portugal has recently begun the third and last phase of deconfinement and reactivation of the economy, with the ample liberation of the functioning of shops, stores, restaurants and tourist activities.