Global slowdown to take pace out of domestic growth

IRELAND’S economy is expected to slow again in the second quarter after a bounce at the start of this year as export growth moderates in the face of a slowing global economy.

A median forecast of eight economists said gross domestic product (GDP) would rise by 0.25% on a seasonally adjusted basis in the second quarter compared with an initially reported first-quarter 1.3%.

Economists also cut their forecast for 2011 GDP growth to 0.5% from 0.7% in the previous monthly poll, the first downgrade in five surveys. They trimmed their outlook for GDP growth in 2012 and 2013 for the second time.

“With signs that the global economy is slowing down, Ireland’s export figures are likely to weaken in the coming months,” said Alan McQuaid, chief economist at Bloxham Stockbrokers.

Second quarter GDP data will be released at the end of this month.

The Government currently forecasts growth of 0.8% for this year, 2.5% in 2012 and 3% in 2013.

The coalition will update its forecasts next month as part of its pre-budget review and four out of seven economists said they expected the Government to downgrade its medium-term outlook. Three said it would stick to existing forecasts.

However, they did expect the Government to meet its target of cutting its deficit to 10% of GDP this year and to get it under an EU limit of 3% of GDP by 2015, as agreed under its EU-IMF bailout.

Five of six economists said Finance Minister Michael Noonan would not have to raise the level of fiscal adjustment targeted in 2012 from €3.6 billion despite the weaker growth outlook for 2012.

Mr Noonan has said adjustments of around €4bn may be needed if the outlook for 2012 worsens.