Category: Archive

Economic panel predicts soft landing for Ireland

February 16, 2011

By Staff Reporter

In its latest analysis, the Economic and Social Research Institute upgraded its summer commentary forecast of 3.4 percent GDP growth this year to 4 percent.
However, it downgraded the 2003 GDP forecast of 4.7 percent to 4.2 percent as the global economic recovery appears to be “slower and weaker” than initial expectations.
It predicts GNP growth of 2.5 percent this year and 3.3 percent in 2003.
The forecasts are much lower than the scorching annual GDP growth of 9.8 percent at the height of the boom in 1995-2000.
Official figures from the Central Statistics Office confirm the slowdown with GDP growth of 6.5 percent in the second quarter of this year compared with the same period last year.
The quarterly national accounts show that growth in terms of gross national product for the second quarter was 4 percent.
The CSO says GDP was up 5.5 percent in January to June while GNP was up 2 percent.
The figures also show consumer spending had slowed to 2.3 percent in the second quarter from 3.5 percent in the first three months. However, government spending grew almost three times as much, at 9.2 percent, in the second quarter.
ESRI says next month’s budget must bring public spending under control and the economy must be shaped to meet the competitive challenge of EU enlargement.
The entry of the former communist bloc and Mediterranean countries to the EU makes it “all the more necessary to control those competitiveness factors under domestic influence in the areas of wages, tax and productivity,” ESRI said.
It said current efforts to negotiate a new national pay deal must involve wage terms that would be “flexible to reflect the changing context.” Salary expectations must be tempered.
“Failure to move the wage bargaining process in this direction will make a future deal both less achievable and ultimately less desirable,” ESRI said.
National partnership pacts have been a key element in the country’s economy for last 15 years. But this time there is no leeway to give tax breaks to offset the size of wage increases.
The ESRI commentary predicts inflation will average 4.7 percent this year and 4 in 2003. Unemployment is expected to average 4.5 percent this year and 4.8 in 2003.

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