The Minster for finance Mr Charlie McCreevy said today the economy’s medium-term prospects remained strong, despite the short-term impact of the global slowdown and the September 11th attacks on the United States.
In his annual pre-budget speech Mr McCreevy said a recovery in the United States was not expected before the middle of 2002 at the earliest, but suggested the slowdown might be less pronounced in the European Union.
"Even before the horrendous events of September 11th there is no doubt that the major world economies, the US, the EU and Japan were experiencing a slowdown", he said.
"This slowdown will have adverse implications for the Irish economy. We are, after all, a very open economy and depend on international trade to a significant extent."
"However... I believe that with the appropriate policy response, Ireland's economic growth will return to sustainable, solid levels in the medium term as the global economic environment improves", he said.
Mr McCreevy gave few clues on the contents of his December budget, but is expected to have considerably less room for manoeuvre than in recent years, when a booming economy has allowed him to make generous tax cuts.
With the slowdown beginning to bite, latest government exchequer figures show rapidly dwindling tax receipts. The 2001 budget surplus is likely to be around euro 1.3 billion, some 1.9 billion below what was originally forecast.
Last year's tax cuts, worth around £2 billion pounds, drew a rebuke from the European Commission, which considered Mr McCreevy's tax and spending plans dangerously expansionary.