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'2013 to be turnaround year for Ireland'

Monday, January 21 10:38:25

This year will mark a turning point for Ireland's battered economy with growth of 1.8pc, according to employers group IBEC this morning.

Releasing its Quarterly Economic Outlook, the group said that, as Irish households gain the same level of confidence in Ireland's prospects as outside investors, recovery will gain momentum. This year will see employment in the private sector begin to grow again.

IBEC estimates that Irish GDP expanded by 1.2pc last year (4pc in terms of value), making Ireland the second fastest growing eurozone economy in 2012, behind only Slovakia.

It forecasts GDP to grow at 1.8pc this year and for the recovery to gain further momentum in 2014.

The forecast expects the Consumer Price Index to increase by an average of 1.5pc this year and estimates inflation of less than 2pc in 2014.

It predicts that 2012 will be the last year of falling employment, with a return to marginal growth of 0.4pc in 2013. Unemployment will stabilise, but will remain high for some time.

Investment in machinery and equipment is estimated to have increased by 8pc last year, across both traditional and modern sectors. It was the first time since 2007 that the investment sector was not a drag on economic growth. In 2013 this investment should increase again by about 10pc, it said.

Commenting on IBEC's Quarterly Economic Outlook, IBEC Chief Economist Fergal O'Brien said: "The economy performed better than many predicted last year. Exports had another record year and a number of indicators suggest the domestic economy has stabilised and is poised to recover. "

"Although many Irish households continue to grapple with debt and unemployment, there is growing evidence that 2013 could be a turning point for the domestic economy. We are edging towards a deal on Irish bank debt, which could provide a much needed boost in consumer sentiment. Last year mortgaged households experienced an improvement in their purchasing power of about 3pc, as incomes stabilised and mortgage costs fell. While the property tax will put a further pressure on households, interests rates are set to remain very low and there will some increases in incomes."

"Exports continue to perform strongly, despite difficult trading conditions. Importantly, we're seeing more businesses successfully making the transition from domestic sales to exports, and progress continues in developing new markets. This will lead to new job creation. Surging international investment in the sovereign, banks and utilities demonstrates that those outside of Ireland have growing confidence in our recovery. When Irish households start to have that same confidence, the recovery will gain greater momentum," concluded Mr O'Brien.