Ibec forecasts growth of over 1%

Ibec still sees the economy growing over 1%, this year, saying it is cautiously optimistic that a better performance in the second half can offset poor first quarter figures, which recently showed GDP dropped by 0.6%, year-on- year, in the opening three months of the year.

In its latest economic outlook, published this morning, the employers’ representative forecasts GDP growth of 1.1% for 2013, ahead of a stronger 2.3% rise next year.

While the 2013 GDP forecast is down by nearly 1% on its own estimate at the start of the year, Ibec remains more bullish than most regarding the economy.

Two outlooks in the past few weeks — from Bank of Ireland and Merrion Stockbrokers — suggested that zero growth would be seen in 2013; while the Central Bank — last week — lowered its forecast by 0.5% to 0.7%.

Ibec’s latest outlook, however, still sees consumer spending remaining flat this year, before picking up by 1% in 2014. Investment in the economy, the organisation added, should rise by 7% this year and by just under 10% next.

“It was a difficult start to the year, but there are signs of renewed economic momentum in the economy.

“Companies say trading has improved in recent months and the good weather, along with positive economic news from the UK and the rest of Europe should help. Consumers, however, remain cautious. It is crucial that the budget sends a clear signal that the end of austerity is in sight,” Fergal O’Brien, Ibec’s head of policy and chief economist said.

Mr O’Brien added that the Government has an opportunity — with stabilising house prices and new measures to deal with the mortgage crisis — to fix the property market, adding that the wider economic and social benefits of a functioning and sustainable property market are enormous.

“Tough political choices are required, but we need to draw a line under the problems caused by the property crash, and move on,” he added.

Turning to October’s budget, Mr O’Brien said it should be used as an opportunity to support consumer confidence and help business grow and create jobs.

“It is vital that the opportunity is not missed,” he said; adding that Ireland’s economy has the capacity to grow by 3%-4% per annum for the next decade.