Portugal Sees Economy Recovering on Construction, Manufacturing

(Bloomberg) -- Portugal’s construction and manufacturing businesses are helping the economy recover from the impact of the pandemic in the first half, Finance Minister Joao Leao said.

“The economy is recovering fast, better than expected both in Portugal and Europe,” Leao said on Friday in a Bloomberg Television interview in Berlin, where he’s attending a meeting of European finance ministers. “The outlook is still very uncertain.”

In the third quarter in Portugal, construction is “doing very well” and manufacturing is recovering, Leao said. While tourism is also having a recovery, it’s been “badly affected,” he said.

The Portuguese economy’s contraction in 2020 will follow six years of growth that helped the country’s minority Socialist government to cut the jobless rate and narrow the budget deficit. For Portugal, which has the third-highest debt ratio in the euro area behind Greece and Italy, tourism represents about 15% of the economy and 9% of employment.

Read more: Portugal Regrets U.K. Decision to Reintroduce Quarantine Rules

The European Commission in July forecast Portugal’s economy will contract 9.8% in 2020 before expanding 6% in 2021.

Portugal plans to use European recovery funds not only for the short term but also to help restructure the economy in the medium term with the digital and energy transitions, said Leao, who was appointed finance minister in June after serving as secretary of state for the budget.

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