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IMF says Portugal's recovery is running out of steam

Posted September 22

— The International Monetary Fund is still worried about Portugal, saying in its latest report that the country is struggling with fragile economic growth, low investment, high public and corporate debt, and bad loans that are a burden on banks.

The IMF notes that Portugal has accomplished "a major economic turnaround" since it needed a 78 billion-euro ($87.7 billion) international bailout in 2011 to avoid bankruptcy. But it says the recovery "is losing momentum."

The fund predicted in its report published Thursday that growth will reach 1 percent this year, down from 1.5 percent last year. It forecasts a budget deficit of 3 percent this year — way off the government's target of 2.2 percent.

The IMF called for a comprehensive spending review, including better means-testing for welfare benefits.

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