Portugal Vulnerable to External Shocks, Says IMF

Weaker growth in the eurozone would “significantly affect Portugal”, the International Monetary Fund warned on Tuesday, saying “lingering domestic vulnerabilities” would amplify any external shock to the former bailout country’s economic recovery, the Financial Times reported. The caution came as fallout from the Italian political crisis pushed Portugal’s 10-year debt yield up 12 basis points on Tuesday. Lisbon’s PSI 20 stock market index fell 2.4 per cent. Within this, shares in Millennium BCP, the country’s largest listed bank, shed more than 7 per cent. In a statement following a May 15-29 mission to Portugal, the IMF highlighted potential external shocks as the greatest risk to the economy, warning that “market interest rate surprises could have an impact on cashflows and activity” because of the country’s high levels of public and private debt. Read more. (Subscription required.)