EC: Ireland’s GDP to hit 1.7pc this year
Slightly lower estimates despite positive signs
Ireland’s GDP growth is forecast to hit 1.7pc this year, according to the European Commission. That’s slightly lower than the 1.8pc it previously expected for 2014.
Releasing its spring 2014 European Economic Forecast this morning, the European Commission said that the EU economic outlook is strengthening.
“While leading indicators point to GDP growth gaining momentum in the near term, the conditions for a sustained recovery in the medium term are also improving,” it said. “In view of the crisis legacy, growth is still set to remain moderate, but a gradual easing of the drag related to deleveraging, financial fragmentation, adjustment of external imbalances and uncertainty is noticeable.”
Despite that, the Commission has also lowered the Euro-area GDP growth forecast for 2015 to 1.7pc from 1.8pc.
It has cut the Euro-area inflation forecast for 2014 to 0.8pc from 1pc.
“The robust performance of the labour market remains the most visible sign of the Irish recovery, while the ongoing deleveraging in the private and the public sector continue to weigh on the speed of the recovery,” said the Commission in its report.
“Public finances benefit from the improved labour market outlook and a rigorous implementation of the 2014 budget would yield a modest primary surplus in structural terms. Based on current projections, Irish government debt peaked end 2013 at close to 124pc of GDP.”
The EC’s projected growth rate for Ireland’s GDP this year is the same as that predicted by the IMF, but much lower than the Government’s own 2.1pc projection. The Government expects GDP growth next year to hit 2.7pc, while the EC reckons it will be 2.9pc.
The EC has also warned that the successful resolution of non-performing loans in the Irish market is a “precondition for the restoration of credit channels and for sustaining the economic recovery beyond the short-term”.