Fiscal Balance in Portugal
Portugal - Fiscal Balance
Portugal rescues Banco Espirito Santo
Portugal’s second-largest bank, Banco Espirito Santo, was bailed out and broken up on 4 August following the announcement that the bank lost EUR 3.6 billion in the first half of 2014, the greatest amount ever for a Portuguese bank. Banco Espirito Santo’s substantial losses stemmed from exposure to their parent companies, three of which have filed for protection from creditors. In May, the Portuguese Central Bank revealed that “serious accounting irregularities” were discovered during an audit of Espirito Santo International, one of these parent companies. Regulators are now investigating allegations of fraud surrounding the bank and other Espirito Santo entities. The failure of Banco Espirito Santo—the only Portuguese bank to pass the European stress tests of 2009 to 2011—raises questions regarding whether more troubles are concealed within Europe’s banking sector.
The Portuguese Central Bank split Banco Espirito Santo into two separate entities. A new bank, Novo Banco, was created, and the sound business activities from Banco Espirito Santo (all deposits, senior debt and most of the assets) were transferred over to that bank. Novo Banco received a EUR 4.9 billion capital injection through Portugal’s Resolution Fund, which was set up by Portugal in 2012 and funded by the Portuguese banking sector. The Portuguese government will provide the fund with a EUR 4.4 billion loan using remaining credit from the country’s bailout, since the fund has not yet been fully developed. The remaining toxic assets were left in Banco Espirito Santo and will be liquidated.
While the collapse of Banco Espirito Santo is a setback for Portugal, panelists do not expect it to impact the country’s future growth. FocusEconomics Consensus Forecast panelists expect that GDP will expand 1.0% in 2014, which is unchanged from last month’s projection. For 2015, the panel expects economic growth to accelerate to 1.5%.
Portugal - Fiscal Balance Data
|Fiscal Balance (% of GDP)||-4.8||-7.2||-4.4||-2.0||-3.0|
5 years of economic forecasts for more than 30 economic indicators.
|Bond Yield||0.17||-1.90 %||Sep 04|
|Exchange Rate||1.10||0.65 %||Sep 04|
|Stock Market||4,931||-0.02 %||Sep 04|
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August 30, 2019
The industrial sector showed improvement in July, with the rate of contraction easing from a revised 5.5% in June (previously reported: -5.8% year-on-year) to 3.5%.
August 30, 2019
Detailed national accounts released on 30 August confirmed that the economy grew 0.5% in quarter-on-quarter, seasonally-adjusted terms in Q2 (Q1: +0.5% quarter-on-quarter).
August 29, 2019
Consumers turned more downbeat in August, with the consumer confidence index tumbling to minus 7.8 points from a nine-month high of minus 6.4 points in July.
August 14, 2019
According to preliminary estimates released by the Statistical Institute (INE) on 14 August, the economy grew 0.5% in quarter-on-quarter, seasonally-adjusted terms in Q2, matching the previous quarter’s print.
July 30, 2019
Consumers were less downbeat in July compared to June, with the consumer confidence index climbing to minus 6.4 points from minus 8.4 points in June, marking the best reading since October 2018.