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This contraction can notably be explained by a contraction in domestic demand totalling 6.3 per cent this quarter against 4.3 per cent in the last quarter of 2012.
The Portuguese Parliament approved a revised budget on 7th June forecasting further austerity measures to compensate for those rejected in April by the Constitutional Court and to enable the respect of the budgetary goals set by the international creditors. "This revised budget includes measures that will help us to respect the deficit goal of 5.5 per cent of the GDP at the end of the year", stressed the Finance Minister Vitor Gaspar. They notably plan for a reduction in the functioning budgets of all ministries, an extension of civil servants' working hours from 35 to 40 hours per week as well as an increase in their social contributions. The government also intends to do away with 30,000 civil servants' posts out of a total 700,000.
Full report (Portuguese only)