Portugal records double-dip recession in 2011

A woman passes by a closed store in Fanqueiros street in Lisbon downtown on Jan. 16, 2012. / PATRICIA DE MELO MOREIRA/AFP/Getty Images

LISBON, Portugal - Portugal's economy contracted by 1.5 percent last year, pitching it into a double-dip recession amid an acute financial crisis, the country's statistics agency reports.

Portugal needed a 78 billion euro ($103 billion) bailout last year to avoid bankruptcy after a decade of feeble growth.

The government has enacted steep pay and welfare cuts and tax hikes in an effort to reduce Portugal's debt burden, but the measures have crunched spending.

The National Statistics Institute said Tuesday that preliminary data indicated the downturn gathered pace in the final quarter.

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The government forecasts a contraction of 3 percent this year as Portugal endures its worst economic period in recent memory.

[jeannutson]

Moody's decision to cut Portugal's credit rating is in order considering the poor economic performance and is likely to worsen their economic situation by increasing their borrowing cost.