Spring economic forecast looks ‘bleak’

A sharp rise in unemployment to 5.5% before the end of this year and a drop in real GDP growth with just a gradual rise next year is forecast in the EU’s spring economic outlook for Ireland.

For the Union as a whole the prediction is bleak with moderate recovery expected for the second half of 2003, provided the Iraq war does not trigger a decline towards recession.

Growth is likely to disappoint for a third year in a row with the average rate a mere 1% in 2003 in the euro area and 1.3% in the EU overall. A more solid average growth rate of about 2.4% is expected in the 12 members of the euro zone next year when more jobs, greater investment and a more supportive international environment is expected.