Portugal budget deficit narrows, on course for 2018 target

LISBON: Portugal's budget deficit narrowed sharply to 0.9 percent of gross domestic product in the first quarter from 2 percent in the last three months of 2017, putting the country on course to reducing this year's gap towards its 0.7 percent target.

The National Statistics Institute said on Friday that revenues edged 0.7 percent higher in the period while spending fell by 4 percent after having spiked last year due to a 4 billion euro ($4.66 billion) recapitalisation of state-owned bank CGD.

In the 12 months ended in March, the deficit fell to just 0.7 percent after 3 percent for all of 2017. Without the CGD impact, the 2017 deficit was 0.9 percent - the lowest in more than four decades of Portugal's democratic history.

Portugal's economy grew 2.7 percent in 2017, its strongest pace in 17 years, and this year the government expects a 2.3 percent expansion. The economic growth slowed down in the first quarter to 0.4 percent from 0.7 percent in the last three months of 2017, weighed down by lower net exports.

The INE said on Friday that first-quarter net exports of goods and services slipped to 0.9 percent from 1 percent as imports rose 1.4 percent, outpacing export growth of 1.1 percent.