Unemployment to remain high ‘for four years’
And as the Government has finally lowered its growth forecast for the Irish economy, Finance Minister Michael Noonan yesterday revised GDP growth estimates for 2012 down from 1% of GDP to 0.7% of GDP.
In the Stability Programme Update for April 2012, which incorporates the Department of Finance’s Spring Forecasts, the dire employment forecasts have been outlined to the EU Commission despite projected net job creation in the order of 60,000 over the period 2012-15.
It is expected the unemployment rate will fall from 14.3% this year to 11.7% in 2015 as emigration and an anticipated increase of 100,000 of those at work reduce jobless numbers.
“The number of people out of work is set to remain at a relatively high level. As the labour force is projected to decline at a marginally faster rate than employment this year — on the back of continuing net outward migration and subdued labour force participation — the unemployment rate is projected to fall slightly, to 14.3%.
Further declines are projected over the medium term, though the unemployment rate is still forecast to be in double digits by 2015,” the report states.
It has been expected for some time that the Government would reduce its forecast for GDP growth for 2012 and in the SPU published yesterday, Mr Noonan outlined the latest forecast.
“On a number of occasions recently, I have stated that GDP growth for this year in the SPU would likely be revised down compared with the Budget 2012 forecasts.
This revision to 0.7% and a marginal revision downwards of growth in 2013 are set out in the SPU. Over the medium term, the growth forecasts are broadly in line with the consensus forecasts, which reflect a gradual firming and broadening out of activity over this time period”
Mr Noonan said based on these economic growth forecasts and having taken on board the first quarter Exchequer data, the department still expects that the general Government deficit target of 8.6% of GDP for 2012 is on track to be achieved.
“The achievement of the 8.6% target is due to the performance of tax revenue in the first quarter, as well as being further assisted by the likelihood that non-tax revenues are likely to be higher and debt servicing expenditure lower than estimated at budget time.
Continuing to see revenue perform to expectations, while maintaining a control on spending means further progress in achieving budgetary sustainability,” he said.
On the inflation front, Mr Noonan said the Consumer Price Index is expected to average 1.6% in 2012 — the interest rate trajectory is flat at the moment, while base effects will fall out over the course of the year.
“More modest consumer-price inflation is forecast for next year, though as domestic demand recovers, prices should start to trend up again further out the forecast horizon,” he said.
* Department of Finance +0.7%.
* AIB +0.9%.
* ESRI +0.9%.
* Central Bank +0.8%.
* European Commission +0.5%.
* Bloxham +0.5%.
* IMF +0.5%.
* Ulster Bank +0.4%.
* Average +0.65% .
