NCB claims economy will grow by only 1.7% next year

The economy may only grow by around 1.7% next year, according to NCB Stockbrokers.

This would be down on the 2.1% rate of GDP growth that the Central Bank is estimating for 2013.

NCB has kept its broadly negative growth forecast — of 0.3% — intact for this year, but has lowered its 2013 growth estimate from 2% to 1.7%.

The Government recently lowered its 2012 growth estimate from 1.3% to 0.7%, but employers’ representative body IBEC yesterday increased its 2012 outlook — marginally — from 0.9% to 1%, making it the most bullish short-term commentator on the Irish economy.

NCB has also lowered its expectations for Ireland’s budget deficit targets for this year — from its previous 8.7% of GDP to 8.6%, which brings it in line with the Government and troika target.

However, it has increased its 2013 deficit estimate from 7.3% of GDP to 7.8% and sees Ireland’s total debt-to-GDP ratio peaking at 123% in 2014.

NCB said yesterday it now estimates total Irish economy debt — taking in everything from general government debt, bank debt, household debt, and non-financial corporation debt — stands at 418%.

Brian Devine, the chief economist at NCB, said: “Irish statistics are complicated by the fact that it is a global financial services centre, with assets and liabilities far greater than the Irish economy.

“This often distorts figures and paints a picture which doesn’t reflect ‘Irish’ debt.

“Nama and bank guarantee debt also complicate the matter.

“The consequence of all this is what Ireland is currently living through — a period of deleveraging.

“As the IMF pointed out in its World Economic Outlook three years ago, recoveries following financial and property market crashes are painful and slow, as deleveraging takes place.

“This is exacerbated when the problem is global in nature, as the trade effect for recovery is less pronounced,” Mr Devine said.