(AP) LISBON, Portugal - The Bank of Portugal forecasts the Portuguese economy will stagnate in 2013 after a steep recession this year as austerity measures attached to a 78 billion euro ($103.5 billion) bailout continue to bite.
Portugal became the third euro country after Greece and Ireland in needing a financial rescue last year to avert looming bankruptcy.
The central bank said in a report Thursday it expects the economy to contract 3.4 percent this year and record zero growth in 2013. The economy shrank 1.6 percent last year.
The bank said tax hikes and pay and welfare cuts have brought a sharp downturn in domestic consumption, which it sees falling 6.2 percent this year and 1.6 percent in 2013.
Unemployment has climbed to a record 14.8 percent.