UPDATE 1-Portugal's GDP slumps 14.1% in Q2, biggest contraction ever recorded

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LISBON, July 31 (Reuters) – Portugal’s gross domestic product shrank 14.1% in the second quarter of 2020, the biggest contraction ever, as lockdowns imposed to contain the spread of the coronavirus hit key sectors of the economy.

In a flash estimate, the National Institute of Statistics (INE) said that between April and June this year, the country’s GDP plunged 16.5% compared with the same period in 2019, affected by collapsed private consumption, investment and exports.

“It is a number which will be remembered in the history of Portuguese economy, a consequence of strong confinement, particularly between mid-March and the end of April, which affected almost all economic sectors,” said Filipe Garcia, information economist at Financial Markets, in Porto.

The country had seen some of its strongest growth streaks in the past few years after leaving behind the 2010-13 economic and debt crisis.

Last year, Portugal’s GDP grew 2.2% while unemployment was 6.5%, near record lows. But the economy depends on tourism, which accounts for up to 15% of GDP and has suffered from the coronavirus lockdowns in Portugal and abroad.

The coronavirus is set to leave long-lasting scars on the country’s economy, with the Bank of Portugal predicting Portuguese GDP will contract 9.5% in 2020, the biggest recession in a century. The government estimates it will fall 6.9%. (Reporting by Sergio Goncalves and Catarina Demonydit; editing by Alison Williams, Larry King)

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