Reporting from Washington—
Treasury Secretary Timothy F. Geithner has a message for voters as they listen to Republican presidential candidates call for repeal of the 2010 Dodd-Frank financial overhaul law: Remember the pain.
“I would say remember 2008 and 2009,” Geithner told reporters Thursday during a news conference touting the benefits of the overhaul. “Remember the fact that the reason why we’re living with very high unemployment with millions of Americans that have lost their homes, terrible damage to the basic economics of America is because of the failures that caused this crisis in the financial system.”
“And if you want to go back to that,” he said, “if you want to choose that future, then you should be in favor of the repeal of the law.”
Republican presidential candidates have hammered away at the sweeping rewrite of financial regulations.
At a debate in Florida last month, GOP frontrunner Mitt Romney said the law was “just killing the residential home market and it’s got to be replaced.”
Newt Gingrich was more blunt. Asked what could be done to help struggling homeowners, he said, “I think, first of all, if you could repeal Dodd-Frank tomorrow morning, you would see the economy start to improve overnight.”
In the face of such criticism on the campaign trail and from Republicans in Congress, Geithner defended the law.
He said it already had helped the financial system become “stronger and safer” even as some key provisions, such as the Volcker Rule restriction on banks trading with their own money, are still being implemented by regulators.
Speaking as the head of the Financial Stability Oversight Council, a panel of regulators created by the law to monitor the financial system for signs of problems, Geithner said the law had helped the economy recover.
Regulators this year would designate the large financial firms outside the banking system that will receive tougher oversight because their failure would pose a risk to the financial system, he said.
And the Obama administration would release more details about its plans to overhaul the housing finance system and replace Fannie Mae and Freddie Mac, which the government seized in 2008.
Republicans and business groups have criticized the hundreds of regulations required by the new law and tough new oversight, including the creation of the Consumer Financial Protection Bureau.
They have said that the uncertainty about pending regulations has made businesses hesitant to hire, and that tough new rules on banks, such as requiring them to hold more reserves, was limiting the banks’ ability to make loans to boost the recovery.
But Geithner said the new rules were badly needed to prevent a repeat of the crisis, and he criticized opponents who were trying to drag out implementation of the Volcker rule and other provisions. Slowing those changes would only increase uncertainty, he said.
“No financial system is invulnerable to crisis. We have a lot of challenges ahead. We still have a lot of unfinished business on the path of reform,” Geithner said. “But the American financial system now is much less vulnerable than it was and is now able to help finance a growing economy, rather than being a drag on overall economic growth.”
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2012年1月23日星期一
Indian casinos struggle to get out from under debt
HARTFORD, Conn. (AP) — The warning from the ratings agency could not have been more direct: The parent company of the Mohegan Sun faces a “wall of debt” due early this year as the casino, struggling with rising competition and a weak economy that’s hammered consumer spending, tries to refinance hundreds of millions of dollars in loans.
The Mohegan Tribal Gaming Authority has $505 million in loans outstanding and another $250 million due April 1, Keith Foley, an analyst at Moody’s Investors Service, recently told investors. The gaming authority, parent company of casinos in Uncasville, Conn., and Wilkes-Barre, Pa., also has about $21 million in interest payments due Feb. 15, he said.
Mohegan Sun announced this month that fourth-quarter net income rose significantly, to $46.7 million, compared with a net loss of $26.3 million in the same period in 2010. But it also said it failed to reach an agreement to refinance debt, though lenders waived a possible default.
“They get to live another day,” Foley said in an interview.
Executives at Mohegan Sun did not respond to a request for an interview.
Mohegan Sun is not alone as several Indian-run casinos — some with plans for expansion that have been put on hold — struggle to refinance debt after being caught short when the economy went into recession in December 2007.
Foxwoods Resort Casino in eastern Connecticut seeks to restructure debt, and the Mescalero Apache tribe restructured $200 million in bonds last year for casino resort property in New Mexico. A spokeswoman said Foxwoods is in debt talks, but would not provide details.
An advantage that Indian-run casinos have over their commercial counterparts is that they cannot file for bankruptcy and creditors can’t foreclose on their properties because tribal governments are sovereign, said Clyde Barrow, director of the Center for Policy Analysis at the University of Massachusetts at Dartmouth.
Valerie Red-Horse, an investment banker and financial adviser who worked on the Mecalero Apache deal, called it the “best model out there,” in part because it preserved the casino’s financial distributions to tribal members and tribal government while bond holders kept their stakes, she said.
Some tribes have been forced to agree to cut their distributions until debt is paid down, Red-Horse said. Making sure distributions continue is a “very delicate subject. It causes a lot of angst among tribes,” she said.
Financial problems at the casino, the Inn of the Mountain Gods, were due in part to the slowing economy and faltering tourism, she said.
Indian-run casinos expanded rapidly because they are strong economic development tools for the tribes that run the casinos, said Peter Kulick, a Lansing, Mich., tax and gaming lawyer. The businesses survived economic downturns in the 1970s and 1980s and were seen as immune to recessions, he said.
“In the last go-round, that’s not the case,” he said.
Kulick and Barrow said competition is the newest threat to casinos, even as revenue is now rising as the economy slowly improves.
“There are some real pockets of recovery going on right now,” Barrow said.
Massachusetts legalized casino gambling in November, but it will be years before the three casinos authorized will be operating.
New York Gov. Andrew Cuomo announced this month that he would work with the Genting Group, one of the world’s largest gambling companies, to transform the Aqueduct horse track into a megaplex that would eventually include the nation’s largest convention center, 3,000 hotel rooms and a major expansion of a casino that began operating in October.
For Connecticut’s two casinos, “Aqueduct could be pretty substantial competitive pressure,” Barrow said.
“I don’t see real revenue growth for Connecticut’s casinos, he said.
Declining or stagnant revenue is bad news for Connecticut state government, which takes 25 percent of what the casinos pull in. State revenue from the two casinos reached their peak in 2007 at more than $411 million, said Kevin Lembo, Connecticut’s comptroller who tracks state revenue from all sources.
That’s declined to $342 million in the state’s budget year that ended last June 30, down $69 million, or 17 percent.
“The loss of revenue is one obvious and immediate impact for the state,” Lembo said. “What happens to jobs? What happens to future development plans? These are areas of concern for everyone at this point.”
Lt. Gov. Nancy Wyman said the health of the two casinos is critical because they are destinations in southeast Connecticut, drawing tourists who also visit vineyards along the shoreline, the Mystic Aquarium and other sites.
“This is a big thing for us,” she said.
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The Mohegan Tribal Gaming Authority has $505 million in loans outstanding and another $250 million due April 1, Keith Foley, an analyst at Moody’s Investors Service, recently told investors. The gaming authority, parent company of casinos in Uncasville, Conn., and Wilkes-Barre, Pa., also has about $21 million in interest payments due Feb. 15, he said.
Mohegan Sun announced this month that fourth-quarter net income rose significantly, to $46.7 million, compared with a net loss of $26.3 million in the same period in 2010. But it also said it failed to reach an agreement to refinance debt, though lenders waived a possible default.
“They get to live another day,” Foley said in an interview.
Executives at Mohegan Sun did not respond to a request for an interview.
Mohegan Sun is not alone as several Indian-run casinos — some with plans for expansion that have been put on hold — struggle to refinance debt after being caught short when the economy went into recession in December 2007.
Foxwoods Resort Casino in eastern Connecticut seeks to restructure debt, and the Mescalero Apache tribe restructured $200 million in bonds last year for casino resort property in New Mexico. A spokeswoman said Foxwoods is in debt talks, but would not provide details.
An advantage that Indian-run casinos have over their commercial counterparts is that they cannot file for bankruptcy and creditors can’t foreclose on their properties because tribal governments are sovereign, said Clyde Barrow, director of the Center for Policy Analysis at the University of Massachusetts at Dartmouth.
Valerie Red-Horse, an investment banker and financial adviser who worked on the Mecalero Apache deal, called it the “best model out there,” in part because it preserved the casino’s financial distributions to tribal members and tribal government while bond holders kept their stakes, she said.
Some tribes have been forced to agree to cut their distributions until debt is paid down, Red-Horse said. Making sure distributions continue is a “very delicate subject. It causes a lot of angst among tribes,” she said.
Financial problems at the casino, the Inn of the Mountain Gods, were due in part to the slowing economy and faltering tourism, she said.
Indian-run casinos expanded rapidly because they are strong economic development tools for the tribes that run the casinos, said Peter Kulick, a Lansing, Mich., tax and gaming lawyer. The businesses survived economic downturns in the 1970s and 1980s and were seen as immune to recessions, he said.
“In the last go-round, that’s not the case,” he said.
Kulick and Barrow said competition is the newest threat to casinos, even as revenue is now rising as the economy slowly improves.
“There are some real pockets of recovery going on right now,” Barrow said.
Massachusetts legalized casino gambling in November, but it will be years before the three casinos authorized will be operating.
New York Gov. Andrew Cuomo announced this month that he would work with the Genting Group, one of the world’s largest gambling companies, to transform the Aqueduct horse track into a megaplex that would eventually include the nation’s largest convention center, 3,000 hotel rooms and a major expansion of a casino that began operating in October.
For Connecticut’s two casinos, “Aqueduct could be pretty substantial competitive pressure,” Barrow said.
“I don’t see real revenue growth for Connecticut’s casinos, he said.
Declining or stagnant revenue is bad news for Connecticut state government, which takes 25 percent of what the casinos pull in. State revenue from the two casinos reached their peak in 2007 at more than $411 million, said Kevin Lembo, Connecticut’s comptroller who tracks state revenue from all sources.
That’s declined to $342 million in the state’s budget year that ended last June 30, down $69 million, or 17 percent.
“The loss of revenue is one obvious and immediate impact for the state,” Lembo said. “What happens to jobs? What happens to future development plans? These are areas of concern for everyone at this point.”
Lt. Gov. Nancy Wyman said the health of the two casinos is critical because they are destinations in southeast Connecticut, drawing tourists who also visit vineyards along the shoreline, the Mystic Aquarium and other sites.
“This is a big thing for us,” she said.
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2012年1月17日星期二
China's bad debt risks expose systemic shortcomings
BEIJING (Reuters) – Bad debts in China’s banks painfully expose the shortcomings of an archaic financial system geared to lend to the beck and call of government economic policy, rather than when it is profitable.
The crux of the problem is rising distrust of official appraisals of China’s 10.7 trillion yuan local government loans, which surged on the orders of government as it rolled out a 4 trillion yuan economic stimulus programme at the end of 2008.
Banks say less than 1 percent of the loans are in trouble, a number some investors say is too low to be real as lending unleashed to spur economic growth at its weakest point implies a rising risk of bad debt as the economy slows again.
“I talk to so many people and they say the same thing: they do not trust the data coming from Chinese banks,” said James Antos, a bank analyst at Mizuho Securities Asia in Hong Kong.
China’s state audit office said earlier this month it had uncovered 530 billion yuan worth of irregularities with local government debt, leaving investors wondering how much clean-up work remains to be done.
Lacking information, investors are jumping to conclusions. Some think all local government loans are bad. More sober guesstimates assume 2-3 trillion are sour and banks’ non-performing ratios may quadruple to 5 percent, from an average 1.1 percent.
Investors’ worst fears are a cover-up that threatens financial stability in the world’s No. 2 economy.
This is especially so if Beijing orders banks to lend aggressively this year to support the economy and counter Europe’s slowdown, fuelling a vicious cycle of state-directed lending with poor credit judgment that leads to bad loans.
More immediately, the risk is that rising loan losses hit banks’ net profits and capital bases, forcing another government-led bailout like that a decade ago when Beijing spent billions on capital injections to shore up state-backed lenders.
OPTIMISTS EYE REPAYMENT
Optimists say Beijing will pay the debt, or let local governments sell bonds to repay loans used mainly for building infrastructure. Investors like the former option as it is clean and fast, but Beijing is non-committal.
Markets hate that uncertainty, which is one reason why Chinese bank shares have underperformed.
Their average price-to-book ratio of 1.3 is half that of Indonesian banks, according to Reuters data, after the Shanghai financial index plunged some 37 percent in the last two years.
“Certainly a good number of loans made in the last three years will go bad,” said David Madden, a managing partner at DAC Financial Management, a $425 million private equity firm in Hong Kong focused on trading Chinese bad debt.
“They weren’t necessarily made with the highest levels of credit analysis.”
China’s cumulative loan growth is the second fastest in the world’s emerging economies at around 55 percent, after Belarus, and a third faster than India’s 40 percent, Fitch Ratings said.
Yet Chinese banks insist bad loans are falling, not rising.
Their weighted-average non-performing loan ratio dipped 0.1 percent in the third quarter from the previous three months, Citi data showed. In contrast, Indian banks’ weighted-average ratio rose 7.5 percent, hurt in part by a falling rupee.
Non-performing loans are those where borrowers have not made payments for at least 90 days and are in or close to default.
Investors suspect banks are concealing bad loans by adamantly refusing to label them as non-performing when cash-strapped governments cannot repay.
Instead, analysts say banks have — or will — quietly restructure loans by extending maturities, violating best practice where loans are marked non-performing before being restructured.
China’s top state-owned banks declined to comment.
CONSTRAINED BY ACCOUNTING RULES
“The market does not like the fact that you are trying to hide loans which do not meet current terms,” said an analyst at a foreign bank in Hong Kong who declined to be identified.
That Chinese banks are concealing bad debt would be even more apparent if they continue to report enviably low non-performing loans in their 2011 results in March, analysts said, since a fifth of all local government loans matured last year.
In banks’ defence, they could argue their provision coverage of 190 percent is among the highest in Asia, meaning they have put aside 1.9 yuan for every yuan of dud loan — although this ratio looks good when banks recognise lower levels of bad debt.
Margarita Ho at PricewaterhouseCoopers in Beijing said banks are also constrained by China’s accounting rules.
“The accounting rules do not permit banks to provide reserves for losses based on future events, regardless of how probable they are,” she said.
But some investors argue the economic reality is that China has more bad loans than it is admitting to, especially with its economy now slowing, and so its financial stability is at stake if Beijing does not act more forcefully.
“You kind of let the bad news ride until you are forced to accept it,” said Madden from DAC. “But I don’t think kicking the can down the road is, ultimately, a smart thing to do.”
(Reporting by Koh Gui Qing; Editing by Nick Edwards & Kim Coghill)
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The crux of the problem is rising distrust of official appraisals of China’s 10.7 trillion yuan local government loans, which surged on the orders of government as it rolled out a 4 trillion yuan economic stimulus programme at the end of 2008.
Banks say less than 1 percent of the loans are in trouble, a number some investors say is too low to be real as lending unleashed to spur economic growth at its weakest point implies a rising risk of bad debt as the economy slows again.
“I talk to so many people and they say the same thing: they do not trust the data coming from Chinese banks,” said James Antos, a bank analyst at Mizuho Securities Asia in Hong Kong.
China’s state audit office said earlier this month it had uncovered 530 billion yuan worth of irregularities with local government debt, leaving investors wondering how much clean-up work remains to be done.
Lacking information, investors are jumping to conclusions. Some think all local government loans are bad. More sober guesstimates assume 2-3 trillion are sour and banks’ non-performing ratios may quadruple to 5 percent, from an average 1.1 percent.
Investors’ worst fears are a cover-up that threatens financial stability in the world’s No. 2 economy.
This is especially so if Beijing orders banks to lend aggressively this year to support the economy and counter Europe’s slowdown, fuelling a vicious cycle of state-directed lending with poor credit judgment that leads to bad loans.
More immediately, the risk is that rising loan losses hit banks’ net profits and capital bases, forcing another government-led bailout like that a decade ago when Beijing spent billions on capital injections to shore up state-backed lenders.
OPTIMISTS EYE REPAYMENT
Optimists say Beijing will pay the debt, or let local governments sell bonds to repay loans used mainly for building infrastructure. Investors like the former option as it is clean and fast, but Beijing is non-committal.
Markets hate that uncertainty, which is one reason why Chinese bank shares have underperformed.
Their average price-to-book ratio of 1.3 is half that of Indonesian banks, according to Reuters data, after the Shanghai financial index plunged some 37 percent in the last two years.
“Certainly a good number of loans made in the last three years will go bad,” said David Madden, a managing partner at DAC Financial Management, a $425 million private equity firm in Hong Kong focused on trading Chinese bad debt.
“They weren’t necessarily made with the highest levels of credit analysis.”
China’s cumulative loan growth is the second fastest in the world’s emerging economies at around 55 percent, after Belarus, and a third faster than India’s 40 percent, Fitch Ratings said.
Yet Chinese banks insist bad loans are falling, not rising.
Their weighted-average non-performing loan ratio dipped 0.1 percent in the third quarter from the previous three months, Citi data showed. In contrast, Indian banks’ weighted-average ratio rose 7.5 percent, hurt in part by a falling rupee.
Non-performing loans are those where borrowers have not made payments for at least 90 days and are in or close to default.
Investors suspect banks are concealing bad loans by adamantly refusing to label them as non-performing when cash-strapped governments cannot repay.
Instead, analysts say banks have — or will — quietly restructure loans by extending maturities, violating best practice where loans are marked non-performing before being restructured.
China’s top state-owned banks declined to comment.
CONSTRAINED BY ACCOUNTING RULES
“The market does not like the fact that you are trying to hide loans which do not meet current terms,” said an analyst at a foreign bank in Hong Kong who declined to be identified.
That Chinese banks are concealing bad debt would be even more apparent if they continue to report enviably low non-performing loans in their 2011 results in March, analysts said, since a fifth of all local government loans matured last year.
In banks’ defence, they could argue their provision coverage of 190 percent is among the highest in Asia, meaning they have put aside 1.9 yuan for every yuan of dud loan — although this ratio looks good when banks recognise lower levels of bad debt.
Margarita Ho at PricewaterhouseCoopers in Beijing said banks are also constrained by China’s accounting rules.
“The accounting rules do not permit banks to provide reserves for losses based on future events, regardless of how probable they are,” she said.
But some investors argue the economic reality is that China has more bad loans than it is admitting to, especially with its economy now slowing, and so its financial stability is at stake if Beijing does not act more forcefully.
“You kind of let the bad news ride until you are forced to accept it,” said Madden from DAC. “But I don’t think kicking the can down the road is, ultimately, a smart thing to do.”
(Reporting by Koh Gui Qing; Editing by Nick Edwards & Kim Coghill)
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2012年1月2日星期一
Swan Forecasts Record Investment as Australia’s Economy ‘Growing Solidly’
Australia’s economy is “growing solidly” and capital expenditure by businesses is forecast to rise 32 percent to a record A$158 billion ($161 billion) this financial year, Treasurer Wayne Swan said yesterday.
“That spending, although a drag on productivity now, will increase our economy’s capacity down the track,” Swan said in his weekly economic note. His office also released for public comment an interim report on the tax treatment of losses, in a move he said could “encourage investment in businesses that are struggling or that are just starting up.”
Australia, the only economy in the Group of 10 to avoid a recession during the global credit crisis, expanded 1 percent in the third quarter, faster than earlier estimated. Still, the country’s central bank cut its benchmark interest rate on Dec. 6 for a second straight month, citing Europe’s “much more difficult” financing conditions.
The cut marked the RBA’s first consecutive easing since the depths of the world financial crisis in 2009 and reflected a worsening global outlook that’s weighing on Australia’s exports.
“There’s no doubt the global instability is hitting our economy and our budget,” Swan said. “European leaders made progress during the week on addressing the sovereign debt crisis, but clearly the world now wants to see the talk turned into action. The global community and international financial markets need to see the full details and swift implementation of Europe’s plans.”
Swan said the government intends to boost productivity in Australia, which has declined following “a decade of neglect of investment in critical infrastructure and skills.”
To contact the reporter on this story: Soraya Permatasari in Melbourne at soraya@bloomberg.net
To contact the editor responsible for this story: Jim McDonald at jmcdonald8@bloomberg.net
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“That spending, although a drag on productivity now, will increase our economy’s capacity down the track,” Swan said in his weekly economic note. His office also released for public comment an interim report on the tax treatment of losses, in a move he said could “encourage investment in businesses that are struggling or that are just starting up.”
Australia, the only economy in the Group of 10 to avoid a recession during the global credit crisis, expanded 1 percent in the third quarter, faster than earlier estimated. Still, the country’s central bank cut its benchmark interest rate on Dec. 6 for a second straight month, citing Europe’s “much more difficult” financing conditions.
The cut marked the RBA’s first consecutive easing since the depths of the world financial crisis in 2009 and reflected a worsening global outlook that’s weighing on Australia’s exports.
“There’s no doubt the global instability is hitting our economy and our budget,” Swan said. “European leaders made progress during the week on addressing the sovereign debt crisis, but clearly the world now wants to see the talk turned into action. The global community and international financial markets need to see the full details and swift implementation of Europe’s plans.”
Swan said the government intends to boost productivity in Australia, which has declined following “a decade of neglect of investment in critical infrastructure and skills.”
To contact the reporter on this story: Soraya Permatasari in Melbourne at soraya@bloomberg.net
To contact the editor responsible for this story: Jim McDonald at jmcdonald8@bloomberg.net
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Portugal slips deeper into recession in Q3
LISBON (Reuters) – Portugal‘s economy shrank a greater than initially reported 0.6 percent in the third quarter, slipping deeper into recession as austerity and financing problems weighed amid the debt crisis while export growth slowed.
Austerity measures under Portugal’s 78 billion euro bailout agreed with the European Union and the IMF in May are expected to lead to the deepest recession since the country returned to democracy in 1974. The government projects the economy will contract 1.6 percent this year and 3 percent in 2012.
The National Statistics Institute‘s second reading of GDP on Friday showed a sharper quarter-on-quarter contraction than the flash estimate of minus 0.4 percent.
GDP contracted by 0.2 percent in the second quarter and 0.6 percent in the first quarter of this year, INE said.
“The reduction of economic activity is still more of a reflection of difficulties with the financing of the economy rather than the impact of austerity … which means the recession will continue to worsen in the quarters to come when austerity measures fully kick in,” said Filipe Garcia, head of Informacao de Mercados Financeiros economic consultants.
INE said that year-on-year GDP fell 1.7 percent, the same as in its flash estimate, after a contraction of 1 percent in the previous quarter.
Parliament approved last week a tough 2012 budget that suspends holiday and year-end bonuses for civil servants and hikes many taxes further.
The INE said internal demand, which has already suffered from higher taxes and pay cuts imposed this year, dropped 0.6 percent from the previous quarter as both investment and public consumption ebbed.
Compared with a year ago, internal demand fell a steep 4.6 percent, with private consumption down 3.3 percent and investment slumping by 13.7 percent.
Exports rose just 2.7 percent from the previous quarter, their positive impact neutralised by a 2.4 percent increase in imports. Export growth also decelerated to 6.5 percent year-on-year from 8.7 percent in the second quarter.
Nevertheless, another batch of INE data on Friday showed exports growing faster in the three months through October than in the third quarter, with Portugal’s trade gap falling a steep 30 percent from a year earlier.
The government is hoping a recovery may begin by late 2012 mainly on exports, although many economists warn Europe’s economic slowdown would make it much more difficult for Portugal to return to growth and meet its 2012 budget deficit target under the bailout. It has to slash the gap to 4.5 percent next year from this year’s projected 5.9 percent.
(Reporting By Andrei Khalip and Sergio Goncalves)
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Austerity measures under Portugal’s 78 billion euro bailout agreed with the European Union and the IMF in May are expected to lead to the deepest recession since the country returned to democracy in 1974. The government projects the economy will contract 1.6 percent this year and 3 percent in 2012.
The National Statistics Institute‘s second reading of GDP on Friday showed a sharper quarter-on-quarter contraction than the flash estimate of minus 0.4 percent.
GDP contracted by 0.2 percent in the second quarter and 0.6 percent in the first quarter of this year, INE said.
“The reduction of economic activity is still more of a reflection of difficulties with the financing of the economy rather than the impact of austerity … which means the recession will continue to worsen in the quarters to come when austerity measures fully kick in,” said Filipe Garcia, head of Informacao de Mercados Financeiros economic consultants.
INE said that year-on-year GDP fell 1.7 percent, the same as in its flash estimate, after a contraction of 1 percent in the previous quarter.
Parliament approved last week a tough 2012 budget that suspends holiday and year-end bonuses for civil servants and hikes many taxes further.
The INE said internal demand, which has already suffered from higher taxes and pay cuts imposed this year, dropped 0.6 percent from the previous quarter as both investment and public consumption ebbed.
Compared with a year ago, internal demand fell a steep 4.6 percent, with private consumption down 3.3 percent and investment slumping by 13.7 percent.
Exports rose just 2.7 percent from the previous quarter, their positive impact neutralised by a 2.4 percent increase in imports. Export growth also decelerated to 6.5 percent year-on-year from 8.7 percent in the second quarter.
Nevertheless, another batch of INE data on Friday showed exports growing faster in the three months through October than in the third quarter, with Portugal’s trade gap falling a steep 30 percent from a year earlier.
The government is hoping a recovery may begin by late 2012 mainly on exports, although many economists warn Europe’s economic slowdown would make it much more difficult for Portugal to return to growth and meet its 2012 budget deficit target under the bailout. It has to slash the gap to 4.5 percent next year from this year’s projected 5.9 percent.
(Reporting By Andrei Khalip and Sergio Goncalves)
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