LISBON Jan 30 Portugal's economic decline will
be smaller this year than last and the bailed out country looks
set to return to growth next year, Prime Minister Pedro Passos
Coelho said on Wednesday.
"All forecasts point in one direction, that in 2014 the
Portuguese economy will recover in terms of growth and that
throughout 2013 a turnaround in the recessive trend will occur,"
he told reporters.
Signs that Portugal and Ireland are slowly escaping the
throes of a debt crisis that has gripped Europe for three years
are another leg of the cautious optimism that has gripped
financial markets at the start of 2013.
Its economy, however, continues to struggle with the broad
fall off in demand across the euro zone and the impact of budget
cuts aimed at stabilising public finances.
The Portuguese government expects the economy to shrink 1
percent this year after last year's estimated 3 percent slide,
but the Bank of Portugal has forecast a much steeper contraction
of 1.9 percent this year while Citi economists expect a drop of
as much as 3.7 percent.
Some economists, including at ratings agency Fitch, argue
Lisbon could still need a second rescue programme due to that
Passos Coelho said financing needs for 2013 were covered by
its EU and IMF bailout and a recent tentative return to bond
market operations. He said the country was in no rush to issue
more bonds while it was moving closer to concluding the bailout
programme as planned in mid-2014.
"We have no financing problems in 2013, we have our
financing needs covered so there is no hurry from this point of
view to go to the markets.
"We have to take advantage of good opportunities where by
going to the markets we can prepare a calm transition to a
lasting market financing and at the same time transfer lower
yields to banks and companies," he said.
His finance minister, Vitor Gaspar, echoed those words,
although he said he would seize opportunities to issue bonds if
market conditions were favourable.
Last week, Portugal issued its first bond since it was
bailed out in mid-2011, selling 2.5 billion euros of five-year
bonds. The bonds have fallen in value since the sale, suggesting
investors' so far ravenous appetite for higher-risk euro zone
sovereign bonds may have been sated for now.