Now is the discount of our winter content. Post the festive consumption boom, this certainly seems to be the case as the discounting season gets into full swing. Predictions for 2001 are significantly cutting growth prospects internationally, mainly on the back of indications of a slowdown in the US economy and further downgrades of leading technology stocks.

The consensus forecast on US growth in 2001 has fallen by nearly a full percentage point in just over four months to below 3 per cent and is continuing to fall. The growth prospects for the Irish economy will not be immune if these expectations are realised, given Ireland's openness to trade, in particular its exposure to the US economy as the main destination for exports and biggest provider of foreign direct investment flows.

The main uncertainty faced by forecasters is whether the US is heading for a hard or soft landing. While it would be heroic to discount the recessionary hard landing scenario too readily, there are some grounds for optimism that a soft landing in terms of slower growth is the more likely given the macroeconomic policy mix options available to US policymakers.

The Fed has proven adept on previous shaky occasions over the past 13 years to steer monetary policy to restore the necessary confidence to achieve a soft landing. The large budgetary surpluses also provide a fiscal stabilisation option not available on previous occasions, if President-Elect George W. Bush is allowed to deliver his tax cutting pledges.

The reversal in the strength of the dollar and the recent weakening of oil prices would also give a boost to competitiveness. A slowdown in the US of the soft landing variety need not be considered an entirely unwelcome development for the Irish economy, though there would be some predictable sectoral investment retrenchment. The prolonged expansion of the US economy from 1993 onwards has been paralleled by the remarkable "Celtic Tiger" growth period in Ireland.

A more slowly growing US would impart a deflationary impulse on the Irish economy directly through reduced export and investment demand growth, reinforced by a stronger euro exchange rate against the weakening dollar. Such a slowdown in aggregate demand growth would be desirable in order to restore balance with the economy's growth in supply capacity.

The ability and the willingness, however, to use domestic policy actions to moderate growth back to these sustainable rates seems lacking. Short-term demand management tools available within Economic and Monetary Union are limited to fiscal and incomes policies.

The reality of a tight labour market forcing wage levels higher, along with tax commitments, has meant that the after-tax pay elements within recent budgets and Social Partnership agreement have been demand boosting. Gross domestic product in the Republic has grown at an annual rate of close to 10 per cent over the past three years.

The strong growth in the economy's supply capacity in this period has been mainly a product of employment growth.

With labour force growth beginning to slow towards annual rates below 3 per cent, productivity growth would need to rise by rates in excess of 7 per cent to sustain the recent high rates of economic growth. This would seem to be an unrealistic prospect and rates of output growth of between 5 and 6 per cent seem more sustainable over the medium term based on plausible employment and productivity growth projections.

In the latest Quarterly Economic Commentary by the Economic and Social Research Institute, our forecast for 2001 is 7.3 per cent in real GDP terms predicated on the US growing at 3.4 per cent. Moderately lower US growth, if it transpires, would move the economy back towards the more sustainable rates.

Moderating growth is desirable, not just from inflationary and congestion concerns, but also to ensure that the economy develops as well as grows in a sustainable manner. Development can be interpreted as qualitative increases in economic well-being in contrast to the quantitative increases implied by growth. It is clear that an economy may need to grow in order to develop but there comes a point at which continued growth can be at the expense of development.

Having begun this article by deliberately misquoting the opening of Shakespeare's Richard III, the subsequent line "our dreadful marches to delightful measures" seems to hold much resonance as a warning for the Irish economy going into 2001 to avoid a path that continues to maximise growth for its own sake.

The growth in the Irish economy over the past decade has brought many qualitative improvements in living standards, but the continued rapid pace of demand is giving rise to quality of life concerns.

While we can be sanguine about some discounting of growth predictions for the coming year, we should be more vigilant on our prospects for development by avoiding self-inflicted own goals.

Danny McCoy is editor of the Quarterly Economic Commentary at the Economic and Social Research Institute.