Thursday, October 25 10:23:00
Economists at Davy Research have cut their forecast for growth for Ireland for this year and next to just 0.2pc and 0.9pc respectively in GDP terms, saying that the recession will linger despite export growth.
That's revised down marginally from its previous forecast of 0.4pc while their previous forecast for next year was 1.6pc, reflecting weaker demand for Irish exports in our key trading partners.
Export growth is now forecast to equal 2.6pc in 2012 and 3.2pc in 2013, down from 5pc in 2011, it said.
Although GDP expanded by 1.4pc in 2011, GNP (which excludes multinational sector profits) fell by 2.5pc and domestic demand by 3.7pc.
"While the robust performance of the multinational sector and associated jobs and investment announcements are welcome, the impact on domestic demand and employment has been limited," Davy said.
It now expects GNP to contract by 0.6pc in 2012 and to be flat in 2013. Domestic demand will fall by 2.2pc and 0.6pc in 2012 and 2013 respectively, it forecasts.
Looking to the labour market, it said that employment will expand marginally, by 0.3pc, in 2013 as the pace of public sector job cuts slows.
"But the planned E1.25bn of tax rises will push down on disposable incomes so that consumer spending falls by 0.5pc in 2013. Recent upward revisions to nominal GDP will make it easier to hit bailout targets in 2013, but the key challenge is whether Ireland can achieve nominal GDP growth in excess of 4pc over the medium term to stabilise the debt/GDP ratio."