Portugal: economic convergence stalled

The twenty-year process of economic convergence in Portugal has come to a standstill. Real GDP grew at 3.3%, only matching the Western European average. On the labour market, improvements have been slower, with the unemployment rate sinking to 4.2%. For the year, consumer prices were 2.8% higher than in 1999. In 2001 real GDP will expand by 2%, again keeping pace with Western Europe. This means another lost year in Portugal's economic convergence process and another relative setback for the economy, which is still much less developed than the average Western European economy. Inflation will amount to about 4½%. The unemployment rate will increase to about 4¼% for the year. The deficit in the current account will decline in relation to GDP but will remain alarming. In 2002 the economy will gradually recover and GDP will expand by approximately 2¼%. This rate, however, will just barely match the Western European average so that again no progress will be made in catching up with the other EU countries. The unemployment rate will increase to about 4½%, and consumer prices will also increase by about this rate over 2001.