February 16, 2011
By Staff Reporter
By Andrew Bushe
DUBLIN — A powerful economic rebound is predicted for Ireland by the latest global assessment by the Paris-based international economic think tank the Organization for Economic Cooperation and Development.
It says exports will rise and “supported by robust public and private consumption,” GDP growth is expected to accelerate strongly during the year.
It forecasts growth of 3.5 percent this year and 5.5 percent next year.
Inflation is likely to slow but it will still remain well over the euro area average due to rapidly rising prices for domestic services.
It predicts a rise in unemployment to 4.9 percent in 2002 and 2003 from 3.9 percent in 2001.
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OECD concerns about public finances and the sharp shift from a huge treasury surplus to a deficit has been highlighted by opposition parties in the general election campaign.
“For an economy experiencing a temporary downturn, the shift in fiscal stance from sizeable structural surplus to small deficit has been inappropriately large,” the report said.
The OECD said it suggests “weakness” in the budgetary system.
“Current public expenditures need to be better managed to avoid the choice of either allowing further fiscal slippage or cutting infrastructure investment,” it said.
The organization also warned of that wage growth will not ease sufficiently and thereby dampen the recovery of exports and investment.
“Failure to control the expansion of the public sector would magnify such a risk,” the OECD added.