PORTUGAL’S economy shrank for an eighth quarter and unemployment rose to a euro-era record as the government implemented austerity measures in an attempt to rein in its budget deficit and curb debt.

Gross domestic product (GDP) declined 0.8 percent in the third quarter from the second quarter, when it fell 1.1 percent, the National Statistics Institute said in a preliminary report yesterday.

The jobless rate rose to 15.8 percent in the three months through September from 15 percent in the second quarter, the Lisbon-based statistics institute said in a separate statement.

Prime Minister Pedro Passos Coelho is battling rising joblessness and a deepening recession as he cuts spending and raises taxes to meet the terms of a e78 billion (R868.4bn) aid plan from the EU and the IMF.

The Portuguese government aims to reach a budget deficit of 5 percent of GDP this year and 4.5 percent next year. It will only cut the deficit below the EU’s 3 percent limit in 2014, when it targets a 2.5 percent gap. – Bloomberg