Bleak forecast predicts 117,000 extra job losses
The final forecast of the year has predicted the amount of people working will fall by 117,000 in the next 12 months and unemployment will hit 9.4% — more than twice what it was last year.
The ESRI also estimated 50,000 will leave the country to work in the next 12 months.
The amount of houses completed will be less than half of what came on the market this year and the price of homes will drop by 10%.
The Government deficit will grow to 10.6%, worse than what was predicted in the budget and will be €16.6 billion short of meeting expected demands.
The ESRI said the economy will shrink by 4.6% next year while consumer spending will decline by 3.6%.
Investment in the economy is also expected to slump by one fifth.
Jean Goggin of the ESRI said international forces and the weakening of sterling will hit exports which is likely to cause further job losses beyond 2009.
Ms Goggin said there was nothing to suggest an immediate recovery was on the horizon. “The very best case scenario is the downturn bottoms out this time next year,” she said.
ESRI economist Dr Alan Barrett said the institute could not predict on the basis of hope, adding that the reality was not promising. He said people had to reconcile themselves to a deepening recession.
Mr Barrett said the Government would have to increase borrowing by a tenth to maintain current services but in many respects the economy was at the mercy of international forces.
“In truth the policy options in the short-term are limited. In terms of turning things around in 2009 there really are not a lot of options there,” he said.
The institute said the prospect of a more prolonged downturn in the global economy remained.
And with all our major trading partners experiencing a recession, we would suffer.
A separate study on office property in Dublin by John McCarthy of the ESRI was also released yesterday.
Mr McCarthy looked at the market in the capital for the past 32-years and found a boom-to-bust cycle had persisted.
He said a peak in the number of units coming online was hit this year but the market was not there to support the growth.
This would result in the direct loss of 7,500 construction jobs, with production falling by 48% in 2009 and another 14% in 2010.
Mr Barrett said there was nothing tangible to pin hopes of a recovery on but, historically, once the initial panic of a recession had subsided people usually began spending again and this would help a turnaround.
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