The Government should address the State's creaking infrastructure and take on board the recommendations of the mid-term review of the National Development Plan, the employers' lobby group IBEC said today.
In its quarterly economic review IBEC warned that "inadequate infrastructure has resulted in congestion costs and overpriced housing; the Central Bank says that Ireland's price levels are 12 per cent higher than in the euro area".
Irish competitiveness has fallen back to the levels of the early nineties as the State has become a "high wage cost economy", the group claimed.
IBEC highlighted what it claimed was a lack of investment in waste infrastructure.
It says the Government should pursue the recommendations in the NDP mid-term review that will improve Ireland's global competitiveness.
This should include accelerating the rate of broadband rollout, it said. The group said questions remain on the strength of the US recovery. It forecasts GDP growth of 3.8 per cent and GNP growth of 3.5 per cent.
IBEC is predicting the employment rate to rise from 4.8 per cent this year to 5.2 per cent due to slower employment growth.
Consumer spending should recover slightly in 2004 with IBEC expecting it to rise to 3 per cent. The employers' body said it anticipates consumer spending to end 2003 at close to 2 per cent.
Noting that Irish inflation at 3.8 per cent remains nearly double the EU harmonised rate of 2.1 per cent, IBEC suggested that inflation could drop to 2.4 per cent in 2004 - a prediction dependent on "no additional tax increases which in recent years have contributed significantly to keeping Irish inflation at the top of the EU countries."