World economy1

The recovery of the global economy slowed further in 2013. The forecast for growth
in economic activity was +2.8% (vs. +3.1% in 2012 and +3.9% in 2011). This slowdown
has affected both advanced economies (+1.1% in 2013 vs. + 1.4%. in 2012) as well as
emerging and developing economies. (+4.5% in 2013 vs. + 4.9% in 2012).

Focusing the analysis on advanced economies, it is worth mentioning the
improvements seen in the European Union (zero growth in 2013), following a
contraction in the economy in 2012 (-0.4%). A major contributing factor to this
performance was the stabilisation of the Euro zone, that emerged from the
longest recession in its history, and the strong performance of other EU member
states (such as the United Kingdom, with growth of +1.3% in 2013 against that of
+0.1% in 2012. Japan is expected to report similar growth to that of 2012 (+2.1% in
2013 vs. +2.0% in 2012), whilst political uncertainty in the United States and the
implementation of fiscal consolidation measures are expected to contribute to a
reduction in the growth of GDP from +2.8% in 2012 to +1.6% in 2013.

Emerging economies also continue to slow down, as a result of the structural
challenges affecting many of the main economies in this group, such as the current
transition in China from an investment based economic model to a consumer based
model, or Russia’s dependency on raw materials. Looking at the main regions, in
2013, growth of +7.5% is expected in China, +5.0% in Sub-Saharan Africa and +2.9%
in India. Latin America (+2.6%) and Russia (+1.9%) are expecting to see growth
below the world average.

1 European Commission: European Economic Forecast, Autumn 2013

Euro zone2

Following a contraction of GDP by -0.7% in 2012, the Euro zone is expected to
contract by only -0.4% during 2013. Major factors in this improvement are the
reduced uncertainty surrounding the future of the Euro zone, and the reduction
in budgetary consolidation across the various members of the single currency.
As a result, the fall in private consumption was reduced by half (-0.7% in 2013 vs.
-1.4% in 2012), public spending stabilised in 2013 (following a reduction of 0.5% in
2012) and net exports continued to make a positive contribution towards growth
(positive contribution of 0.6% in 2013). On the down side, a further increase in unemployment should be mentioned (from 11.4% in 2012 to 12.2% in 2013).

2 European Commission: European Economic Forecast, Autumn 2013 – Euro Zone

Interest rates3 4

During 2013, the ECB cut its reference rate twice from 0.75% to 0.25%, while the
United States Federal Reserve kept the Fed Funds Target Rate between 0% and
0.25%. Moreover, the drop in the reference rate and the uncertainty about the
future of the single currency kept Euribor rates at reduced levels. Therefore, at 31
December 2013, Euribor rates for 3, 6 and 12 months stood at 0.287% (compared
to 0.187% at the end of 2012), 0.389% (vs. 0.320%) and 0.556% (vs. 0.542%).

3 Reference rates: ECB and FED (;
4 Bank of Portugal: Euribor rates

Portuguese economy5 6

2013 was marked by a recovery in the growth of the GDP in equivalent terms
and by the end of the recession in the third trimester. As a result of increased
activity throughout 2013, a -1.5% contraction in the GDP is expected at year end
(-3.2% in 2012). This development came as a result of reduced cuts in private
consumption (-2.0% in 2013, vs. -5.4% in 2012), public spending (-1.5% in 2013,
vs. -4.8% in 2012) and investment (-8.4% in 2013, vs. -14.3% in 2012). The strong
performance of exports is of note (+5.9%), and is greater than the increase in
imports (+2.7%). Taking a closer look at the contributing factors to the variation
of the GDP in 2013, domestic demand is expected to drop by -2.7% and net
exports are expected to rise by +1.1%, representing, as in 2012, the only positive
contribution to the Portuguese economy. Finally, it is worth noting that although
the public deficit targets are expected to be met, public debt continues to
increase, and is forecast to reach 127.8% of GDP in 2013 (as against 124.1%
in 2012).

5 Bank of Portugal: Economic Bulletin Winter 2013
6 European Commission: European Economic Forecast, Autumn 2013 – Portugal