ESRI urges action to halt serious deterioration in public finances

THE Government will have to act decisively to halt a serious deterioration in the public finances, according to the Economic & Social Research Institute which predicts a noticeable recovery in the Irish economy, next year, on the back of a rebound in international trade.

However, the ESRI also warns that there are considerable risks on the downside. In particular, a continuation in the rise in the value of the euro against the dollar would deliver what amounted to a "double whammy" to the economy. The Institute has revised slightly down its estimates for economic growth in Ireland, this year, following the sharp downturn in tourism and the blow dealt to the farming sector by the recent bad weather.

Irish GDP should grow by 3.4% this year, before bouncing back to rise by 4.7% in 2003 while GNP a more reliable measure should increase by just under 3% in 2002 before regaining momentum to register a rise of 4.5% in 2003. Growth in employment has slowed sharply over the past 12 months and the ESRI is forecasting a modest increase of 0.7% for 2002 in reality, this modest growth is due to the carry over effects of jobs, many in the public sector, announced and advertised some time ago and filled more recently. Next year, employment is expected to inch forward by 1.6% , lagging a more general recovery in national output the lag effect may be more pronounced than usual given the acute uncertainty out there at present.