'Gradual recovery' set to continue
Published 29/01/2013 | 11:30
The Central Bank has revised its reports on economic growth for last year but cut its predictions for this year.
The first quarterly bulletin for 2013 estimates domestic business will grow by 0.5% this year compared to forecasts from the end of last year of 0.7%. And the value of the overall economy, measured by Gross Domestic Product (GDP) and including the multinational sector, is expected to grow by 1.3%, down from 1.7% from the autumn report.
"While the economic outlook remains challenging, the forecast is for a continuation of the gradual recovery in the overall level of economic activity, though at a slightly slower pace than previously projected," the first bulletin of 2013 said.
It blamed weakened markets overseas for a slowdown in exports late last year. It also warned that trend is likely to continue while domestic demand keeps making steady progress.
As for last year, the Central Bank revised its figures with GDP growth up from 0.5% to 0.7% and Gross National Product (GNP) up from the forecasted -0.4% to 1.5%.
Looking further down the line, the Central Bank estimates that next year will see GDP growth of 2.5% and GNP growth of 1.4%. The Central Bank said it was particularly concerned about the growing long-term nature of the mortgage arrears problem.
"While banks have now started to develop and roll-out some long-term mortgage modification and resolution measures, the level of implementation, through either debt restructuring or loan recovery, has been far from adequate so far," it said.
"While there is a delicate balance to be struck here, it is critical that financial institutions move to deal decisively with the issue of long-term mortgage arrears. Much more needs to be done, and in a timely manner."
The Central Bank's own figures revealed last month that more than one in ten mortgage holders are in arrears of three months. Some 26,770 or 17.9% of buy-to-let mortgages were in arrears of more than 90 days at the end of September 2012.
Elsewhere, the Central Bank said unemployment is estimated to fall to 14.5% in 2013.