Friday, February 03, 2012
Ireland’s economy — in GDP terms — will only grow by around 0.5% this year, according to the Central Bank.
The newest forecast marks the latest in a string of downgraded outlooks the Central Bank has made in the past year. Its last forecast, in October, was for 1.8% growth in 2012.
In its latest quarterly economic bulletin — published yesterday — the Central Bank said that GDP grew by around 0.8% in 2011. It doesn’t expect to see any real growth in the economy until next year, when it anticipates growth of 2.1%.
That 2013 figure isn’t too far away from the Government’s projections of 2.4% growth. But the Government still seems out of line with most economists when it comes to growth projections for this year — with a 1.3% forecast.
Davy Stockbrokers has also lowered its 2012 GDP growth outlook from 1.7% to 0.4%; Goodbody has gone from 1.2% to 0.7% and NCB from 1.1% to 0.3%. Only Bank of Ireland and Merrill Lynch, outside of the Government, have remained confident that the Irish economy will deliver growth of 1% or more this year.
The Central Bank’s latest downgrade is based on the continuing slump in the domestic economy and the slowdown in export performance.
While the bank warned that any longer-than-projected global economic downturn could threaten Ireland’s medium-term budget deficit reduction targets (particularly this year and next), it said that the Government should still meet its target of lowering the deficit to 8.6% of GDP this year.
"Any developments in Europe, that contributed to improving growth conditions, or that effectively provided Ireland with better financing conditions, would be important in improving the prospects for the debt ratio to commence," the latest outlook stated.
In other statistics, the Central Bank said that unemployment should rise, marginally, this year to 14.6%; before decreasing to 14.1% in 2013.
It added that personal consumer expenditure will continue its descent this year, slipping by another 1.5% (after a drop of nearly 3% last year), before finally seeing a marginal growth rate of 0.2% in 2013.
Export growth is set to slip below the 4% mark this year, but is expected to be back around 5% next year.
© Examiner Publications (Cork) Limited, City Quarter, Lapps Quay, Cork. Registered in Ireland: 73385.
