Recession will end ‘in first three months of 2010’

THE recession will officially end in the first three months of next year with economic growth reaching 4% as early as 2011, according to one of the country’s leading stockbroking firms.

Echoing the bullish predictions by Davy Stockbrokers, separate analysis from the Government’s economic think tank, the ESRI, suggested a quicker than expected economic recovery could emerge in 2011 or by 2012 at the latest

In the Davy report, the company’s chief economist Rossa White predicted that while economic growth would average 0.5% next year, construction activity would continue to shrink until 2011 and unemployment would peak at around 14% towards the end of next year.

In his assessment Mr White suggested that the quicker than expected recovery taking place in the global economy would lead to an earlier exit from the economic gloom in Ireland.

He warned, however, that it would take longer for the return to growth to become obvious on the ground.

In his last review in May, Mr White suggested the economy might not hit bottom until the first half of next year.

“We’re a little bit more optimistic than that now and we think we will reach that trough at the back end of this year and that the economy will return to tentative growth in the early part of next year,” he said.

The Davy forecast also suggested consumer spending could increase 1.5% as real incomes stabilise and consumers become less worried about the future and that export growth was “likely to quicken” as Ireland feels the effect of a worldwide economic recovery.

Economic and Social Research Institute (ESRI) economist John FitzGerald was also optimistic on the economy saying he expected recovery to kick in 2011 or by 2012 at the latest.

He told the annual conference of the Small Firms Association that any return to growth would, however, depend on the Government taking tough decisions to cut costs in the next budget.

“Ireland has a future, providing certain things are done,” said Prof FitzGerald, pointing to 2011 or 2012 for recovery.

Davy’s bullishness on the economy contrasts sharply with the Central Bank which forecast a third year of recession in its last quarterly economic bulletin in July. The Central Bank suggested that while the economy would start to pick up in the latter half of next year, negative growth of close to 3% was likely again next year.