ECONOMISTS CUT their economic growth forecasts for Ireland for the next three years, projecting slower expansion than assumed in the Government’s planned fiscal reform trajectory, a Reuters poll showed yesterday.
The median forecast of 10 analysts polled by Reuters was for a 0.7 per cent rise in gross domestic product in 2010, below the 0.8 per cent seen in last month’s survey and the Government’s 1 per cent projection.
For next year, economists see an expansion of 2.7 per cent, down from 3 per cent, with only the most optimistic of the participants matching the department’s 3.3 per cent estimate.
With the department expecting average growth of 4 per cent between 2011-2014, the timeframe set out to bring the budget deficit in line with EU rules, analysts’ consensus figure for 2012 is still somewhat short of that at 3.7 per cent.
The government says that, “one-off” bank rescue funds notwithstanding, the “underlying” budget deficit is on track to fall to 3 per cent of GDP by 2014 from 14 per cent in 2009.
The International Monetary Fund has warned, however, that slower-than-forecast economic growth was also a key risk for the fiscal reform plans.
“The massive bank bailout programme is essential if credit conditions are to loosen,” said Melanie Bowler at Moody’s Analytics in London. “Reluctance to lend is hindering the recovery in the Irish economy.”
On a median basis, analysts expect this year’s budget deficit to come in at 12.1 per cent of GDP, slightly above the official 11.5 per cent target. – (Reuters)
