Department of Finance revises down GDP growth forecast

The Department of Finance has revised its projections for Gross Domestic Product (GDP) growth next year down from 2.4 per cent to 1.8 per cent, the Oireachtas Committee on Finance has been told.

A senior official also said last night that Prof John McHale, chair of the Irish Fiscal Authority Council (IFAC), had written to the department last Friday saying its projections fell within an "endorsable range".

The IFAC has a statutory and independent role in deciding whether or not it endorses the department’s forecasts.

Fiscal assumptions
It means the council is likely to endorse the economic and fiscal assumptions underlying the budget. Officials on the department's macro economic side briefed the all-party committee on its assessment of the economic outlook that will underpin next week's budget.

Minister for Finance Michael Noonan gave an undertaking to the committee that it would be privy to the same information that had been given to IFAC.

John McCarthy, a finance official, told the committee that the projections for 2013 had fallen from 1.8 per cent at the time of last December’s budget to 0.2 per cent as of mid-September. He also confirmed that the growth rate for 2013 now looked likely to be 0 per cent.

On a positive note, it was noted that the exports of services, such as information technology, had shown growth.

Household savings
While household savings rates remains high, the department officials told the committee that there was some evidence it was beginning to fall.

The department is also of the view that the unemployment rate will continue to fall in 2014, down to slightly under 13 per cent from a high of 14.7 per cent in 2012.