BoI keeps economic growth forecasts unchanged despite 0.2% GDP growth

Bank of Ireland has kept its forecasts for the country’s economic growth unchanged, despite recent figures showing GDP growth of 0.2% in the third quarter of 2012.

In its latest quarterly economic bulletin, issued yesterday, Bank of Ireland Global Markets said the modest third quarter rise in the economy was significant — illustrating annualised growth in domestic demand for the first time in over four years — but was unlikely to prevent a fall in domestic spending for 2012, as a whole.

Thus, the bank’s chief economist, Dan McLaughlin has reiterated his forecast of 0.8% GDP growth for 2012 and a 1.5% rise in 2013.

Both of these figures are unchanged from his last bulletin — published in October — but that edition was significant in its lowering forecast for 2012, from 1% growth to a 0.8% increase.

While Dr McLaughlin’s outlook for 2013 remains unchanged, his reasoning has altered. He sees Irish economic growth, this year, coming about with domestic demand improving and making less of a negative contribution and net exports showing less of a positive contribution.

Earlier this week, the Irish Exporters’ Association reported a 5% growth in export performance for 2012 and forecast further growth of 5% and 7% this year and next.

Dr McLaughlin only foresees export growth of 3.5% for this year. On the unemployment rate, he sees a slight reduction — this year — to 14.3%, while personal consumption will show no growth.

He also thinks the Government will just about hit this year’s budget deficit target of 7.5% of GDP.

The latest Bank of Ireland economic outlook comes days after a much less bullish set of forecasts from independent think-tank, the Nevin Economic Research Institute, which has predicted GDP growth of just 0.3% for 2012, 0.6% for 2013, and 0.8% for 2014 — adding that it won’t be until 2015 when the economy will see any real significant growth levels.

The Government is currently forecasting growth of 1.5% this year and 2.5% and 2.9% for the following two years.

The Nevin Institute also expects Ireland’s unemployment rate to rise above 15% this year.

Picture: Dan McLaughlin: Foresees export growth of 3.5% for this year.