Friday, September 20 11:51:32
Ireland's chances of being able to make a full return to financial markets now appear good, according to Ernst and Young's autumn EY Eurozone Forecast (EEF).
The Government undershot its deficit target for 2012 by a considerable margin, while 10-year government bond yields have been below 4pc for much of 2013, it noted.
Marie Diron, senior economic adviser to the EY Eurozone Forecast said Ireland is highly likely to be able to exit the bailout programme next year, as planned. "The country has shown exemplary success in meeting the programme's objective".
"Ireland may apply for a precautionary credit line, which would smooth the return to market-based financing and would allow the ECB to activate its bond purchase programme in support. Ireland should now be able to enter a new phase characterised by much less fiscal tightening. This would help the economy consolidate the gains in the export sector in order to achieve broader and more robust growth".
Current plans across the Eurozone imply that the pace of fiscal austerity is set to fall from 0.8pc of GDP this year to around 0.5pc of GDP in 2014-15. This will substantially reduce the drag on growth from austerity, the EEF said. Ireland's employment rates have risen for three consecutive quarters and we expect unemployment to have peaked with a gradual decline from 13.5pc,12.9pc and 12.2pc in 2013, 2014 and 2015 respectively.
The forecast predicts that the Eurozone will contract by 0.5pc this year, a slight improvement from last quarter's forecast, followed by growth of 0.9pc in 2014. GDP growth of 1.5pc a year is expected in 2015-17. However, ever increasing differences remain between the core and periphery.
Germany remains the powerhouse of the Eurozone, showing 0.6pc growth this year with Ireland at 0.1pc. After increasing by 0.1pc in 2013, we expect Ireland's GDP to rise by 1.7pc in 2014, accelerating to growth of 2.8pc a year in 2015 - 17. The forecast predicts a stabilisation of the economy in Italy and Portugal in 2014 and Greece in 2015.