LISBON, Jan 30 (Reuters) - The number of firms going bust in recession-hit Portugal jumped 41 percent last year, but the toll should fall in 2013 after rising for seven years, credit insurance company Cosec said on Wednesday.
Cosec, Portugal’s largest insurer, said in its annual report 6,688 companies were unable to pay their debts and declared insolvency in 2012, nearly a third of them in the construction and real estate sector. Three-fourths of the insolvent companies were small businesses.
The government expects the economy to have contracted 3 percent last year in the worst recession since the 1970s, stoked by painful austerity measures applied under a 78-billion euro EU/IMF bailout. This year, the economy is expected to shrink less and then return to meagre growth in 2014.
“Portugal should be among four countries (in Europe) to show a reduction in the number of insolvencies in 2013 after seven consecutive years of steep rises,” Cosec said, naming the others as Britain, Switzerland and Norway.
Unlike neighbouring Spain, Portugal had no major property bubble before the economic crisis started in 2008. But the construction and real estate sector has been hit by a sharp drop in economic activity and internal consumption caused by sweeping austerity measures.
Last year, the construction sector, which is the country’s largest employer and accounts for 18 percent of gross domestic product, shed 20 percent of its jobs, around 130,000.
Overall, unemployment in Portugal is at record levels of around 16 percent. (Reporting By Andrei Khalip; editing by Stephen Nisbet)