RESULTS are being seen in Ireland of a return to a vibrant tradable sector, according to the International Monetary Fund.
The IMF said export growth is picking up sharply in Ireland and competitiveness indicators are improving.
The IMF released its regional economic outlook for Europe yesterday and said Ireland is an “afflicted” country, but it remained rather upbeat on Ireland and Europe.
Europe is benefiting from the general global recovery that is under way in terms of exports.
It did, however, say that Greece, Ireland, Portugal and Spain remain weak as they try to correct imbalances in budgets. It envisages Portugal and Greece as remaining in recession this year.
The IMF said real activity in Europe is projected to expand by 1.7 and 1.9% this year and next, compared with 1.7% in 2010.
The IMF stated: “The landscape should continue to be varied within advanced Europe, though private demand is expected to continue to strengthen in the core euro area and the Nordic countries, largely offsetting the impact of fiscal consolidation on growth, while remaining weak in Greece, Ireland, Portugal, and Spain, where efforts to work off large precrisis imbalances persist.”
It said that overcoming the crises in Europe ultimately requires restoring productivity growth in the afflicted countries.
The Economic and Social Research Institute (ESRI) said this week that Ireland should aim to cancel its deficit entirely in 2014 to boost its credibility with financial markets and improve its ability to eventually return to debt markets.
The Government is currently aiming to cut the deficit, among the worst in Europe at close to 12% of gross domestic product (GDP), to under 3% by 2015.
The ESRI said there is strength in exports with traditional Irish firms, not just Irish-based multinationals, raising overseas sales. It upgraded its growth forecasts, with GDP expected to expand by 2% this year and 3% next year compared with estimates of 1.5% and 2.25% in its previous quarterly update.
Also yesterday the IMF said that Italian economic growth remains “modest” and the government needs to embark on a “bold” overhaul of the economy to unlock the country’s growth potential.
“Growth is mainly driven by exports, but remains modest” it said. “Only a bold and comprehensive structural reform program will unleash Italy’s growth potential.”
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