Economy on the rise, but 50,000 job losses forecast

THE economy is on the road to recovery, but the outlook for jobs remains bleak, with 50,000 further losses forecast for 2010.

Bank of Ireland’s latest economic review says GDP growth of 1% is likely this year, followed by a 3% lift next year. A modest decline in job losses is expected next year with some job creation starting to emerge as consumer spending has a more positive impact.

GNP, which excludes profits from the robust multinational sector, is set to decline by 1.5%. For many analysts, this is the best measure of economic performance.

The report is in line with the consensus forecast for this year and next.

In its European economic update PricewaterhouseCoopers (PwC) is forecasting a 0.755% fall in GDP for Ireland in 2010.

We will be the only country in the eurozone expected to experience deflation in 2010, said PwC.

It is also suggesting a slower growth rate in 2011 of 1.15%, against BOI’s 3%.

Growth will be almost exclusively export-led, with 90% of GDP attributed to overseas sales, said Bank of Ireland group chief economist Dan McLaughlin.

Due to the strong export component in the figures, GNP is set to fall.

Mr McLaughlin, said the recovery in 2011 will be more broadly based, with the consumer contributing a bit more to annual growth.

While recent figures suggest some return to positive economic activity by the consumer this year, it will not be seen in the figures, due to the large 7% decline in spending in 2009.

“Uncertainties abound, both domestic and international, but at this stage we still expect GDP to grow by 3% next year, which is in line with the consensus view,” said Mr McLaughlin.

The pace of job losses has slowed and the unemployment rate may be at or near the peak.

Many unemployed non-Irish nationals are leaving because of the continuing decline in the number of jobs in the economy, he said.

In Britain, consultancy group Ernst & Young has revised its economic growth forecasts for the next three years and has predicted the Bank of England is likely to leave interest rates untouched until 2014 because of the government’s budget squeeze.

Gross domestic product will rise 2.2%, compared to a prediction in April for a 2.7% expansion.

The research group – which uses the same forecasting model as the British Treasury – said economic revival will be “slow” and “patchy” as GDP climbs 1% this year, according to a Bloomberg report.

“Growth will struggle to reach 1% this year, but will gradually speed up in the following years to give the UK a high-quality recovery based on trade and investment,” the report said.


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