Decline in 2009 GDP ‘will make it hard to cut deficit’

THE decline in the nominal value of the economy (GDP) in 2009 will make it more difficult for the Government to reduce the budget deficit to below 3% before 2014.

NCB economist Brian Devine said “the most significant figure in the national accounts” issued last week was the downward revision of nominal GDP in 2009 from €163.5 billion to €159.6bn. This year’s budget was based on an estimated 2009 GDP figure of €164bn, he said.

With that figure now cut by nearly €4bn for 2010 that changes the budget projections because the deficit is likely to be larger proportionately than the GDP figure, he said.