Forecaster raises GDP growth outlook to 1%

One of the least optimistic economic forecasters has become slightly less pessimistic about the Irish economy’s prospects, upping its outlook for 2013 GDP growth by nearly half a percent.

In the spring edition of its quarterly economic observer, the Nevin Economic Research Institute has predicted Irish GDP growth of 1% for 2013, to be followed by 1.2% in 2014 and 2% in 2015.

Previously, the independent economic think-tank had given a gloomier outlook of just 0.6% growth for this year and 0.8% in 2014, with the economy not likely to see growth of over 1% until 2015.

However, NERI has remained firm on its other headline previous prediction — of the Government failing to achieve its current budget deficit reduction target, to 3% of GDP, by 2015.

The institute’s current forecast is for the deficit to be 3.8% of GDP by then.

However, it is still too early — and quite unlikely — that Ireland will require a second bail-out, said Tom Healy, the director of the institute.

However, Dr Healy did add that, “without growth, the Government’s borrowing targets look ambitious and call into question the feasibility of the adjustment path currently being pursued”.

The institute’s latest bulletin also sees Ireland’s unemployment rate remaining at 14.7% this year, before marginally increasing to 15% over the next two years.

It added that the country’s gross debt levels should peak at 121.1% of GDP this year, before marginally reducing in 2014 and 2015.

Summing up the institute’s latest outlook, Dr Healy said: “The story behind these figures is one of continued stagnation, with sluggish growth and ongoing high levels of unemployment.”

Last week, the Central Bank marginally downgraded its GDP growth outlook for 2013, from 1.3% to 1.2%.

In March, professional services giant Ernst & Young slashed its growth forecast for the Irish economy in 2013 from 1% to 0.1%.

It concluded that it will be 2015 before GDP growth tops 2%.