Portugal’s government expects the economy to shrink more than was forecast by the previous administration and the central bank.

Gross domestic product (GDP) will drop 2.3 per cent this year and 1.7 per cent

in 2012, according to forecasts.

That compares with the 2 per cent decline forecast by the previous government and the Bank of Portugal.

Portugal will only see an “expressive economic recovery from 2013”, finance minister Vitor Gaspar said at a press conference.

The forecasts aim to be more in line with those included in the bailout plan approved in May, which saw GDP shrinking 2.2 per cent in 2011 and 1.8 per cent in 2012, he said.