Portugal economic index has first, shy rise since before bailout

LISBON Fri Oct 18, 2013 10:01am EDT

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LISBON (Reuters) - A composite measure of how Portugal's economy is performing showed its first annual improvement in September since before the country took an EU/IMF bailout in mid-2011, Bank of Portugal data showed.

The bank said its index of coincident economic indicators, compiled using measures such as gross domestic product (GDP), retail sales and new job offers, rose 0.1 percent last month from a year earlier after a drop of 0.6 percent in August. A year ago, the fall was 2.9 percent.

The last time the change in the index was positive in February 2011. Portugal requested its bailout in April of that year and obtained a 78-billion-euro ($107 billion) rescue line from the European Union and International Monetary Fund in May.

In the first nine months of this year, the index was still 1.5 percent lower than a year earlier.

Portugal's economy emerged from its worst recession since the 1970s in the second quarter, when GDP grew 1.1 percent compared with the preceding three months.

The government said growth had most likely continued in the third quarter. It still expects GDP to shrink 1.8 percent this year before returning to annual growth in 2014.

The Bank of Portugal earlier this month modified its 2013 outlook to forecast a contraction of a 1.6 percent rather than 2 percent.

Lisbon hopes to complete the bailout program by mid-2014 as planned and return to normal debt market financing, although officials acknowledge it is likely to need a precautionary European program after the end of the bailout.

(Reporting By Andrei Khalip; Editing by Ruth Pitchford)

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