Portugal suffered a big 1.2 percent drop in output in the second quarter, compared with the previous quarter's modest 0.1 percent drop.
Both Greece and Portugal have received financial bailouts from the other eurozone countries and the International Monetary Fund and were required to adopt tough austerity measures in return.
Italy and Spain, the eurozone's third- and fourth-largest economies, shrank by 0.7 percent and 0.4 percent respectively in the second quarter. Both countries are struggling to convince markets they have a strategy to get a grip on their debts. Spain has even agreed to a bailout of its banks.
Alexander Schumann, chief economist at The Association of German Chambers of Industry and Commerce, urged Europe's indebted countries to carry on with their reforms and said it won't be long before they start reaping the rewards."We need to be patient but there are positive signs that in 18 or 24 months we might see light at the end of the tunnel in Portugal, Spain, Italy and Greece, "he said. "We can get there if politicians don't block the tunnel with ideas that add new uncertainty."
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