Growth outlook cut for a second consecutive quarter

THE Central Bank has lowered its growth projections for the Irish economy for the second consecutive quarter.

In its latest quarterly bulletin, published yesterday, the Central Bank forecasts the economy, in GDP terms, will grow by 1% this year and by 2.3% in 2012.

Last October, when it warned of “a slowdown in momentum”, it had forecast that Irish GDP would grow by 2.4% during 2011. That figure was down 0.4% on the preceding outlook last summer.

According to yesterday’s bulletin, higher taxes and falling employment levels will keep consumer spending low and economic growth to a minimum: “The prospects for the Irish economy for this year and next have deteriorated in recent months. Domestic demand will weigh more heavily on growth this year and next than was anticipated in the previous bulletin.

“However, export-led growth will provide the impetus for a gradual recovery.”

Saying that, though, the Central Bank also sees Ireland’s export growth moderating this year and next — after a robust rise of around 8.4% in 2010 — “largely reflecting less buoyant growth in our main trading partners”.

“The current account is expected to move into surplus in 2011, reflecting the continuing shift from domestic demand to exports as the main driver of growth,” yesterday’s bulletin also said.

The Central Bank’s director of economic services Maurice McGuire said the revised forecasts are lower than those of the Department of Finance, but higher than the IMF’s expectations and are in line with our broad stabilisation programme.

The IMF has forecast GDP growth of 0.9% for Ireland in 2011, while the Department of Finance is expecting 1% growth.

In GNP terms, the IMF sees Ireland slipping by 1.5% this year, the Government forecasting 1.75% growth and the Central Bank forecasting a 0.3% fall (but a 1.5% boost in 2012).

Figures, published earlier this month, from economic think-tank, the ESRI, forecast 1.5% GDP growth for Ireland in 2011 and a further 2.25% growth next year.