World Economic outlook - Ireland economic growth forecast 2012 : Ireland was one of the countries most affected by the crisis. The collapse of the banking system and the loan from the IMF took at the end of 2010 were the turning points in the last years for Ireland. If at the end of Q3 2011, the Irish economy showed signs of recovery, with an increase of 1.4%, Q4 brought an economic decline of 2%.
Ireland is still affected by what happens in the real estate and construction sector, where prices fell by 45% in two years! GDP fell by 10% in the period 2007 to 2010!
Austerity measures taken by the Irish Government in late November this year will only slow down the economy, which in 2012 will record a fragile increase of 1% growth. Forecast could be changed at the end of first quarter next year, because in March, the franco-german coalition must implement the new deficit rules in the Treaty. IMF has given a new portion from the loan to Ireland, amounting 3.9 bn euros In September, the IMF has transferred another 1.5 bn euros to Ireland.
The economic forecast for 2012 is not very encouraging. Ireland will continue to stay well in exports (especially pharmaceuticals), but will have problems with the construction market and the labor market, which will contract by 0.6%.
Ireland suffered significant losses in competitiveness, as reflected in a strong rise in unit labour costs from 2002 to 2008. Irish price levels grew to be among the highest in the euro area. Inflation is expected to be in 2012 about 0,7%, although this will largely be driven by administered prices. Ireland’s public debt this year will reach 121% of GDP. In 2007, the public debt was 25% of GDP!
OECD Cuts 2012 Irish Economic Outlook
The Organization for Economic Cooperation and Development lowered its 2012 economic outlook for Ireland as export growth slows and said this may threaten the country’s deficit-reduction plans.
Gross domestic product will rise 1 percent next year, the Paris-based OECD said in a report today, after forecasting expansion of 2.3 percent in May. The group raised its forecast for this year to 1.2 percent growth from stagnation.
The cost of insuring against Ireland defaulting for five years has dropped to 743 basis points from 1,296 since July 18, according to CMA prices. Swaps still implying a 47 percent probability of Ireland failing to meet its obligations.
Net export growth may slow to 2.5 percent next year from 3.7 percent this year, the OECD. The country’s unemployment rate will probably remain at 14.2 percent next year, the same as this year, before falling to 13.9 percent in 2013, as growth accelerates, the OECD said. Gross domestic product will expand 2.4 percent in 2013, according to the report.
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