By Sergio Goncalves and Axel Bugge
LISBON (Reuters) - Portuguese economic growth is outpacing the official forecast, fueled by exports and investment, and is set to reach more than 3 percent in the second quarter and more than 2 percent for the whole of 2017, the finance minister said on Wednesday.
Speaking to Reuters in an interview, Mario Centeno said he was confident about Portugal's improving economic outlook after years in the doldrums during the euro zone debt crisis, when the country was forced to seek a bailout.
Lisbon's official growth forecast for 2017 is 1.8 percent.
"The government's message is that economic growth is strong and sustained, and it is accelerating," Centeno told Reuters. "The fact is that we are converging with the European Union, we are finally converging."
He said year-on-year growth in the second quarter was likely to be "above 3 percent, given the acceleration we are seeing". In the first quarter, the economy grew 2.8 percent from a year earlier, its strongest rise in a decade.
For all of 2017, Centeno said there was "no question" that growth would be higher than 2 percent. He would not give a new, precise estimate for this year, but said higher growth would "definitely be incorporated into our projections".
Portugal has been one of Europe's slowest-growing economies for years, and was hit by its worst downturn since the 1970s during the 2010-13 debt crisis, so an accelerating expansion now is welcome news to Centeno's Socialist government.
TIME FOR AN UPGRADE?
Portugal was bailed out between 2011 and 2014 by the European Union and IMF and output is still not back to where it was before the crisis struck.
The minister argued that Portugal should be upgraded by credit rating agencies, the majority of which rate it as 'junk', thanks to higher growth and the fact that it had in 2016 posted its lowest budget deficit in at least four decades.
That has led the European Commission to recommend ending a disciplinary process against Portugal for its excessive budget deficits.
Portugal's bond yields have fallen sharply in recent weeks on the back of improving fundamentals and Centeno said: "We believe this positive trajectory will be strengthened."
In order to take advantage of growing demand for its debt, Centeno said Portugal was soon planning to issue short-term bonds in yuan, which would be the first debt issue in China's currency by a euro member.
Centeno would not directly answer a question about whether he or the Portuguese government was lobbying for him to become the next chairman of the Eurogroup of euro zone finance ministers.
Lisbon has called for the resignation of Jeroen Dijsselbloem, whose term ends in January, over remarks suggesting southern European countries had squandered their money on "booze and women".
Asked if he would want the Eurogroup position if it was offered to him, Centeno said: "We will talk at that time."