Growth forecast lowered again

THE Central Bank has lowered its growth forecast for the Irish economy for the third time in a row but still predicts GDP to grow by 0.9% this year, compared to the IMF’s prediction of 0.5%.

In its latest quarterly economic bulletin — its second since the start of the year — the bank also said it expects Irish GDP to grow by a further 2.2% in 2012.

Its latest outlook for this year’s growth is only slightly down on its previous 1% growth forecast. However, that forecast was made in January and yesterday’s alteration marks the third time in as many bulletins that the Central Bank has downgraded its outlook.

However, the bank still sees slightly higher growth prospects for the economy than the IMF, which downgraded its own forecast for Irish GDP growth from 1% to 0.5% for 2011 earlier this week.

The Central Bank’s director of economic services, Maurice McGuire, said the IMF forecast is not substantially lower and that both sets of figures do still represent positive growth.

“The general picture the IMF has [for Ireland] remains one of growth,” Mr McGuire stated.

The latest forecasts also factor in no change in GNP this year, but a 1.6% rise in 2012. The bank said employment and disposable income levels will remain “under downward pressure” this year, with consumer spending set to contract further and a significant decline in investment spending also in prospect.

The Central Bank said net export growth should outweigh weaknesses in the domestic market, with a 6.1% growth in exports this year and a 5.9% increase next year.

This is contrary to the Irish Exporters’ Association (IEA) warning, earlier this week, that the country’s export performance cannot go on propping up the economy.

However, the Central Bank said the sector is so wide and varied that a fair degree of risk spread can be expected.

“Exports remain the only real engine of growth for the economy,” Mr McGuire added.