Central Bank cuts prediction for Ireland's economic growth

Thursday, February 02, 2012 - 11:00 AM

The Central Bank is significantly downgrading Ireland's economic growth projection for 2012.

In its latest Quarterly Bulletin, the bank is forecasting that the economy will grow by just 0.5% this year, down from a previous prediction of 1.8%.

It is blaming a collapse in demand for products in Ireland's main trading partners.

The Central Bank stament said: "In particular, concerns have escalated about the impact on the public finances of the financial crisis, either directly or indirectly through slower growth, across a range of countries.

"The likely true scale of this impact has only recently become apparent in many cases. This increased pressure on the public finances is having particular consequences in the euro area, where it has exposed short-comings in European economic governance which were not evident during more favourable times."

However, the Central Bank expects a bounce back in 2013 with economic growth of 2.1%.

The bank said: "Uncertainty remains high and a wide range of outcomes is possible, including one in which the domestic economy is held back by weaker external demand for a longer than expected time."

Taoiseach Enda Kenny said the Government’s real priority is jobs and an action plan to ease unemployment would be published in the next fortnight.

“The Government’s growth figures are median figures and we are prepared to stand by those,” Mr Kenny said.

“(It is) very difficult for anybody to determine what the final growth figure might be but the Government have set out their figures and we stand by that.”