Moody’s: “Portuguese economy will continue to suffer”

Moody’s Corporation – one of the three largest corporate finance and credit ratings agencies in the world – recognises that Portugal, and countries like Spain and Italy “announced additional significant measures (to reduce the deficit) for 2010 and 2011”, but, unfortunately this “simultaneous fiscal austerity will have a negative impact on growth perspectives within the Euro Zone”, which, in turn, will weaken governments’ capacities to reduce their deficits.

Only last month, Moody’s cut their rating (that’s the corporation’s take on the country’s capacity to pay its debts) for Portugal. Now, this latest document – which updates Moody’s rating, affirms that “the financial strength of the Portuguese government will continue to weaken in the medium term”, and that “perspectives for economic growth should remain relatively weak”.

The corporation considers that in 2011 the deficit should fall from 7.5 per cent to 6.8 per cent of GDP – but the Government say they can attain 7.3 per cent and 4.6 per cent, respectively.