The International Monetary Fund has forecast that Portugal will be the only developed economy to suffer a recession in 2012 adding to the country’s bleak outlook as bailout talks get underway, according to Financial Times. The international lender forecast that gross domestic product in Portugal would decrease by 0.5% in 2012 after a 1.5% fall during 2011, after the country further restrains spending to meet international demands. Economist Vítor Bento said Portugal “will inevitably have to make a big economic adjustment,” even as political turmoil makes passing additional austerity measures a significant challenge.

Meanwhile, the IMF has upgraded its view of the Spanish economy, with a top official from the lender offering his view that fiscal reforms are gaining traction and the country will likely be able to avoid an international bailout. The IMF’s monetary and capital markets director José Viñals said, “The actions that have been taken in Spain recently have managed to decouple in the views of markets the fortunes of Spain relative to those of Portugal,” Ireland, and Greece. Viñals went on to add that the country’s situations are now “completely different cases,” offering reassurance that the Spanish government will be able to repay debts.

Click here to read the story on Portugal from Financial Times.

Click here for coverage of Spain's outlook from Financial Times.