Ireland to head eurozone growth

IRELAND is on course to become the fastest-growing eurozone economy by 2015, but it will be a jobless recovery, according to the latest Ernst & Young’s Autumn Eurozone Forecast.

Despite the latest Central Statistics estimates for the second quarter of 2011 which showed seasonally adjusted increases of 1.6% in GDP and 1.1% in GNP compared with Q1 2011 data, the forecast is pencilling in 1% economic decline in Ireland for 2011.

The forecast now expects GDP growth to fall to an anaemic 1.1% in 2012, across the eurozone. The forecast has also cut the 2011 forecast from 2% to 1.6%. This is provided that an orderly restructuring is carried out for Greece and assistance provided for other troubled countries.

The EEF authors state Ireland’s economic outlook remains highly vulnerable to negative developments in the eurozone and is forecasting the Irish economy will decline by 1% overall in 2011, as a result of weakness in the domestic economy.

“The EEF believes that despite a slight economic fallback in 2011, Ireland is well placed to experience a rebound in its economic growth over the next four years. Ireland is currently ranked 15th of the 17eurozone nations in terms of 2011 economic growth — ahead of Greece (-6.0%) and Portugal (-2.0%).

“Ireland is forecast to achieve positive economic growth in 2012 (+0.9%). It will begin to outperform the eurozone average economic growth from as early as 2013 and by 2015. Ireland is forecast to have the greatest economic growth across the euro zone (+4.7%) — a position it will share with Estonia.

The Ernst & Young team said the longer-term forecast is for Ireland to continue to have the slowest inflation rise across the region until at least 2015 over which time inflation will rise half a percent.

Yesterday, the RaboDirect Investor Barometer reveals that almost a quarter of respondents (24.7%) are optimistic about the development of the Irish economy over the last three months, compared with 13.6% in the same survey in March 2011.