Portugal government said it expect the economy to contract this year by 0.9% after expanding 1.4% in 2010, due to the drop in investments and spending cuts that will damage growth.

Bank of Portugal predicted in January that the economy will contract by 1.3%, while on budget cuts, the economy to grow 0.3 percent in 2012, and 0.7% in 2013 and 1.3% in 2014.

Debt as a percentage of GDP is expected to reach 87.9 percent according to the government forecast, while it will reach 88.1% in 2012, while drop to 87.4% in 2013.