Ireland's fastest-growing Eurozone economy gets EC forecast boost
The European Commission has upgraded Ireland's growth forecast for this year and next.
It now believes the Irish economy will grow by 4.9pc in 2016 - faster than the 4.5pc predicted just a few months ago.
In 2017, growth is expected to be 3.7pc, marginally better than the previous estimate of 3.5pc.
Once again, Ireland is forecast to be the fastest growing economy in the Eurozone.
Overall, the Commission believes the performance in the Eurozone may weaken. It believes that despite surprisingly strong growth in the first three months of the year, growth across the bloc is likely to slow down slightly this year as ultra-low interest rates have yet to spur faster investment.
Officials in Brussels are forecasting growth of 1.6pc this year, down from the 1.7pc last year.
The Commission said low oil prices, interest rates at zero or less, a weak euro and supportive fiscal policy would underpin growth this year, but that "the level of investment remains depressed and unemployment far too high." Commission vice president Valdis Dombrovskis said "future growth will increasingly depend on the opportunities we create for ourselves".
He added: "That means stepping up our structural reform efforts to address ... high levels of public and private debt, vulnerabilities in the financial sector or declining competitiveness."
The ECB has cut its main refinancing rate to zero and is charging banks for keeping their deposits in a bid to seek a returns through lending to the real economy. It has also been buying hundreds of billions of euros worth of government bonds on the secondary market to inject more cash into the economy. In a veiled swipe at the Eurozone's biggest economy, Germany, which is to maintain a budget surplus until 2017, the Commission said "some countries could take better advantage of their fiscal space to increase investment".
Germany has had a budget surplus since 2014 and at the same time the country has for years had a large current account surplus that has been exceeding the EU ceiling of 6pc of GDP, beyond which it is considered an imbalance.
The data from the Commission showing Ireland's performance this year comes in the wake of the publication of the Stability Programme Update, which showed that the recovery is spreading at a faster rate than predicted as consumers loosen their grip on savings and tax receipts run ahead of target,
But it also warns of the dangers of Britain leaving the EU. (Additional reporting Reuters)