Portugal will go into recession this year as the coronavirus hits private consumption and investment and exports collapse, the country's central bank has said.
Portugal has 3,544 confirmed cases of the coronavirus, with 60 reported deaths, far below other southern European countries such as Italy and Spain.
Virus Impact
In its economic bulletin, the first data set showing the impact the virus is likely to have on the economy, the Bank of Portugal said gross domestic product would drop between 3.7% and 5.7% in 2020. Last year it grew 2.2%.
Private consumption is set to fall 2.8% to 4.8% and exports will decrease 12.1% to 19.1% this year, according to the bulletin. Private investment will drop between 10.8% and 14.9%.
The unemployment rate is set to increase to between 10.1% and 11.7% this year, compared with 6.6% in 2019.
"The outlook for the Portuguese economy deteriorated sharply and significantly as a result of the impact of the COVID-19 pandemic," the Bank of Portugal said in a statement.
The outbreak will have "very significant and potentially long-lasting effects", it said.
It said Portugal, which completed a strict EU bailout programme in 2014 in the wake of the 2008 global financial crisis, should return to economic growth over the next two years.
It projected growth of 0.7% to 1.4% in 2021 and 3.1% to 3.4% in 2022.
Portugal declared a state of emergency on March 18, which meant the closure of non-essential businesses, affecting thousands of jobs across the country.
Worker Support
The government also announced a €9.2 billion package worth 4.3% of annual GDP to support workers and provide liquidity for affected companies.
On Thursday, the government announced a set of new measures to help companies and families, including a six-month suspension of the payment of loan instalments.
Those unemployed or in mandatory isolation are automatically eligible.
"This measure will provide very significant relief given the financial efforts made by companies and families," said Economy Minister Pedro Siza Vieira.
Boosted by the exports sector, the tourism industry and private investment, the economy had been steadily growing since it exited its bailout programme in 2014.
On Wednesday, Portugal reported a budget surplus of 0.2% of gross domestic product in 2019 - its first in 45 years of democracy - after a deficit of 0.4% in 2018.
That day Finance Minister Mario Centeno said all scenarios pointed to a recession.
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