Central Bank: Unemployment to reach 15% in 2010

The Irish economy will continue to struggle until the second half of 2010, when unemployment is predicted to reach 15%, according to the Central Bank’s latest forecast, published today.

It also said that the downward economic trend will continue until the first half of next year.

This will be followed by “a stabilisation and gradual recovery in the second half of the year,” the report said. This resurgence will be based on a gradual recovery in world demand next year.

By contrast, demand in Ireland will continue to decline until 2011.

The Central Bank expects house building to continue to fall and said people generally will have less disposable income, which will further hit retailers.

“There is little prospect of any recovery in domestic demand before 2011,” the Central Bank said.

However, by the end of 2011, this will have run its course and there is a prospect of some recovery in domestic demand, which, coupled with healthier global appetites, should support a return to modest growth overall.

The Central Bank said rising unemployment will continue to hit Irish towns and cities throughout this year and next.

Unemployment is likely to average 12.75% of the labour force this year, rising to an average of 15% in 2010.

Meanwhile, a report by the UCD Michael Smurfit Graduate Business School and the Marketing Institute of Ireland (MII) reveals that consumer spending has fallen by 14% from end of 2008 to the start of 2009.

The report said cagey consumers are saving money rather than splashing the case.

Personal savings have increased from 3% of disposable income in 2007 to 10% in 2009, which appears to be a precautionary response to the rapidly deteriorating prospects for employment and incomes.

Retail sales value, excluding the motor trade, decreased by 43.9% for the year ending May 2009. The report shows bar sales have held up better than might be expected, with a decline of 11.4% in volume and 9.8% in value.

Article courtesy of The Evening Echo newspaper.