LISBON, June 16 (Reuters) - Portugal’s economy could tank an unprecedented 15% in the second quarter due to the impact of the coronavirus, bringing the contraction this year to 9.5% - the steepest drop in nearly a century, the Bank of Portugal said on Tuesday.
The central bank’s full-year forecast is worse than the government’s estimate of a 6.9% slide and represents a major revision downwards from the bank’s own March projection of a fall of up to 5.7%.
It said the impact of the pandemic and subsequent lockdowns in Portugal and abroad would be the heaviest in the second quarter, and although there was still a lot of uncertainty about the setting, the quarter-on-quarter slide “could reach a value of around 15% ... without a historic precedent”.
In 2020, it said, “we should see the biggest fall in economic activity of the last century ... in the context of global GDP and trade declines only comparable to those registered during the Great Depression in 1929”.
The central bank said that if the pandemic remains under control and restrictive measures are gradually lifted, economic activity should pick back up from the third quarter, expecting growth to reach 5.2% in 2021 and 3.8% in 2022.
Last year, the country reported 2.2% growth and the first budget surplus in its 45-year democratic history.
The bank forecast that unemployment, which had been falling steadily under the ruling Socialists to 6.5% in 2019, would jump to 10.1% this year, slightly above the government’s estimate of 9.6%.
Exports including tourism, credited with fuelling much of the country’s recovery from its last crisis in 2010-2014, are expected to fall by 25.3%, while private consumption should fall by 8.9%. (Reporting by Victoria Waldersee, Sergio Goncalves, editing by Andrei Khalip)