UPDATE 1-Tourism-dependent Portugal posts worst GDP hunch since 1936

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By Patricia Vicente Rua

LISBON, February 26 (Reuters). Portugal saw the sharpest economic decline since 1936 last year as both domestic and foreign demand declined due to the COVID-19 pandemic, particularly in tourism.

Gross domestic product fell 7.6% in 2020, data from the National Statistics Institute (INE) showed on Friday, nearly double the 4.1% 2012 rate during an austerity program linked to an international bailout.

“Domestic demand was a significant negative contributor to the annual rate of change in GDP, largely due to the decline in private consumption,” INE said.

“The contribution of net external demand was more negative in 2020, mainly due to the unprecedented reduction in tourism exports.” Tourism accounts for 15% of GDP.

INE cut growth from its flash estimate of 0.4% to 0.2% over the last three months of the year. This was a significant decrease from the 13.3% growth in the third quarter.

In its second GDP measurement for the quarter, INE also said the economy was down 6.1% year-over-year and revised its flash estimate of a 5.9% decline.

The government has forecast a 5.4% recovery this year, but the Treasury Department has already warned that the current nationwide lockdown will have a negative impact in the first few months of 2021.

Portugal imposed a night curfew and partial weekend lockdown in early November and tightened curbs in mid-January as the pandemic worsened.

On Thursday, another nationwide lockdown was extended to at least mid-March, but the president urged the government to come up with a plan to gradually lift the strict rules. (Reporting by Patrícia Vicente Rua in Lisbon and Joao Manuel Mauricio in Gdansk; editing by Ingrid Melander and Andrew Cawthorne)