Ulster Bank economist predicts 0.5% growth in 2012

A leading economist with Ulster Bank has today predicted that Ireland's economy will grow this year, outperforming the Eurozone.

Simon Barry said that while the Eurozone will contract this year, Ireland will see 0.5% growth.

The economy had a return to positive GDP growth in the first three-quarters of 2011 as a result of export growth.

The bank's chief economist says a continuation of growth in internationally-traded sectors will provide support again this year.

“While the US economic outlook has firmed slightly in recent months, growth expectations in Europe have been hit hard by the debt crisis, with the euro area now likely back in recession,” – Mr Barry told over 150 business professionals attending the William Fry breakfast briefing titled 'Eurozone Challenges: Likely Implications'.

“With GDP growth likely to be around 0.5% this year, Ireland is set to out-perform the Eurozone in 2012. Ireland had a return to positive GDP growth in the first three-quarters of 2011 reflecting the boost from ongoing expansion in exports, and a continuation of growth in the internationally-traded sectors of the economy will provide support again over the coming year.

“Prospects for exports are also supported by the improvements in Ireland’s competitiveness over the past couple of years which help contain the negative impact of a weaker European economy,”

“However, despite indications lately of some stabilisation in the euro area, the sharp deterioration in European growth prospects will make it very hard for Irish growth momentum to improve this year.

“Moreover, the pace of overall growth will not be strong enough to support a recovery in domestic demand, including employment for example. However, over time, export-led growth will have a stabilising effect on the domestic economy.”

Commenting on the possibility of a second bailout for Ireland, Mr Barry said: “At one level, the need for a second bailout just doesn’t arise at present. The State has no requirement for cash in the near future.

“What does arise is the need for Ireland to return to funding markets at some point in 2013. Therefore, the next 15 months are critically important for Ireland’s economy and perceptions of credit-worthiness.”