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Portuguese report Portuguese report
by Euro Reporter
2011-10-09 11:30:09
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Portugal faces strong restrictions on financing

The Portuguese economy is having trouble obtaining financing, with banks relying on the European Central Bank and the government tapping bailout funds, Finance Minister Vitor Gaspar said. “The Portuguese economy is facing a very strong restriction on financing at present,” Gaspar said today at a conference in Oporto, northern Portugal. “Access to external private financing was interrupted” and funding “is maybe the biggest short-term challenge we face.”

Nine Portuguese banks today had their debt ratings cut by one or two levels by Moody’s Investors Service, which cited concern about funding, bad loans and holdings of government debt. Moody’s cut the “standalone” ratings of three banks, Banco Espirito Santo SA, Banco Comercial Portugues SA and Banco BPI SA, by two levels, the company said in a statement.

Portugal in April became the third euro-area country to seek a bailout after Greece and Ireland. It will receive 78 billion Euros ($105 billion) under the agreement with the International Monetary Fund and the European Union. ECB President Jean-Claude Trichet on April 7 said the central bank “encouraged” Portugal to seek aid, adding that the country’s banks needed to reduce their reliance on ECB funding.


Economic recession in 2012 will be worse than expected

Portugal’s economic recession will worsen, the Bank of Portugal said Thursday in Lisbon after lowering its estimate for gross domestic product (GDP) contraction for 2012 against a previous projection of 1.8 percent. The 2.2 percent contraction of GDP, which is expected to follow shrinkage of 1.9 percent this year, largely reflects budgetary consolidation measures that will have an even greater impact on family income and a scenario of more restrictions on access to funding.

In its autumn Economic Bulletin published Thursday, the Bank of Portugal said it expected greater contraction in private spending, of 3.6 percent instead of 2.9 percent outlined in the previous bulletin, a greater contraction in investment, shown by a 10.8 percent drop in Gross Fixed Capital Formation as compared to the 10 percent previously expected. “Contraction of private spending is evidence of the first immediate impact of budgetary consolidation measures on prospects for the progress of permanent family income, as well as uncertainty about additional measures that may become necessary,” the Bank of Portugal said.

Families are faced with the added difficulty of the economy failing to create jobs, and the central bank said that, “adverse conditions in the labour market,” remain, which, “is expected to imply significant salary moderation.” until 2012. The significant drop in economic activity that will be seen, the Bank of Portugal said, will lead to “reduced employment of around 1 percent in 2011 and 2012, which will lead to an increased unemployment rate,” which is expected to affect both the public and private sector, “in line with the reduced number of employees in the State sector,” already outlined by the government.


Europe’s most depressed

According to data made public this week, Portugal is the world’s second most depressed nation and also the most depressed in Europe. It is further estimated that a third of the country’s seriously mentally ill do not receive any treatment for their disease. Figures released by the European Alliance Against Depression (EEAD), show that the United States is the only country which is ahead of Portugal in terms of depression rates and mental illness as a whole.

“It appears that the well-known Portuguese melancholy has a psychiatric translation” the Portuguese coordinator for the EEAD, Ricardo Gusmão, was quoted as telling Lusa News Agency. And while the use of anti-depressants is much higher than most countries, Dr. Gusmão says many patients are left untreated. “The most serious consequence of non-treatment of depression is suicide and the majority of suicides occur within the context of depression”, he explains. The psychiatrist further added that a stigma is still attached to depression in Portugal, which might lead many sufferers to opt against treatment.

Nevertheless, the sale of anti-depressants in Portugal has risen 300 percent between 1995 and 2009, with a reduction in cost being put forward as one of the main reasons behind this high increase. It is believed that more than one fifth of the population in Portugal suffers from some form of mental illness, a recent study concluded, which said the prevalence of depression in Portugal is “atypical” for a European country.  These were the conclusions of the first ever study launched to trace the profile of mental health in this country, which are also part of international epidemiological studies by the World Health Organisation (WHO), being coordinated by Harvard University, in America, and involve another 23 countries.  Authors of the study describe it as “the biggest data base in the world” of its genre, involving more than 100,000 participants.

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