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Portugal central bank sees economy contracting 8.1% in 2020, less pessimistic than June forecast

LISBON, Oct 6 (Reuters) - Portugal’s central bank revised its June forecast of a 9.5% GDP contraction to a slightly less pessimistic 8.1% on Tuesday, citing a better than expected recovery from lockdown.

The country’s GDP contracted 9.4% in the first half of the year but a lower impact from lockdown and better reaction by companies and households to the lifting of restrictions led the bank to revise its expectations upwards, it said.

Still, GDP is expected to contract 6.8% in H2 compared to 2019, with restrictions still in place in some sectors and the recovery in tourism and services slow.

“This recovery is fast and sustained, but incomplete. Recovery will continue, but it will be slower and slower,” central bank governor Mario Centeno told a news conference.

The bank predicted a decline in exports of 19.5% over the course of the year, with private consumption falling by 6.2% and investment by 4.7%.

Last year, the country reported 2.2% growth and the first budget surplus in its 45-year-old democratic history.

The unemployment rate is seen to rise to 7.5% in 2020 from 6.5% in 2019. (By Sergio Goncalves, Victoria Waldersee, Editing by William Maclean)

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