By Andrew Bushe
DUBLIN — As the Irish economy continues to boom, the government has sharply revised upwards a series of forecasts made in last December’s Budget 2000 and now predicts inflation will average 5.25 percent for the year.
The new inflation prediction issued by the Department of Finance is assuming "unchanged interest and exchange rates and unchanged oil prices."
The Economic Review and Outlook for 2000 report says the government is "very concerned" about the impact inflation could have on the economy.
Finance Minister Charlie McCreevy warns of the need to avoid actions that would have an adverse impact on competitiveness and lead to loss of employment.
Figures released by the Central Statistics Office earlier this month showed that inflation was running at an annual rate of 6.2 percent during July — the highest since February 1985.
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Earlier this year, the government had maintained that inflation would come down to an average of about 3 percent during the year.
Inflation has been rising steadily since it bottomed out at 1.2 percent in July 1999. The increase threatens the key national pay deal, the Program for Prosperity and Fairness.
The report predicts that the economy will grow by 10.3 percent in GDP volume terms and GNP will increase by 8.3 percent.
The forecasts in the 2000 budget last December had been for an increase of 7.4 percent in GDP and 6.3 percent in GNP.
The Celtic Tiger economy’s GDP growth has averaged 9.3 percent in 1994-99.
The report forecasts that unemployment will fall to 4 percent, with 75,000 jobs being created during the year.
It predicts the general government balance will remain in surplus at about 3.75 percent of GDP and general government debt will fall to 42 percent of GDP.