Noonan confident Greek setback won't hit Ireland
Economists triple Irish growth forecast for 2011 to 1.4pc, says Reuters poll
Published 04/10/2011 | 05:00
GREECE'S failure to hit targets imposed by the international authorities will have "no cross-over effects" for Ireland's bailout programme, Finance Minister Michael Noonan said last night.
His comments came as European finance ministers met in Luxembourg the day after Greece's administration admitted that country would not be able to hit the 2011 debt target laid down by the so-called troika.
The troika of the European Union, European Central Bank and International Monetary Fund look set to give Greece a pass on the missed target if the failure is attributed to the weakening economy rather than policy inaction.
Meanwhile, economists almost trebled forecasts for Ireland's economic growth this year after a much better than expected second quarter but a fragile global outlook has tempered expectations for the following years, a Reuters poll showed.
The median forecast for gross domestic product growth for 2011 from 10 economists surveyed by Reuters rose to 1.4pc, from 0.5pc forecast a month ago, after second-quarter growth came in at 1.6pc.
The prospect of a global slowdown hitting Ireland's buoyant exports prompted a cut in the median forecasts for 2012 and 2013 by 0.25 percentage points to 1.65pc and 2.45pc respectively.
"Although there are still clear downside risks, we remain hopeful that after three successive years of contraction the Irish economy will return to positive GDP growth in 2011 followed by a stronger performance over the next couple of years," said Alan McQuaid, chief economist at Bloxham Stockbrokers in Dublin.
"The signs are that the country is heading in the right direction."
The forecasts show Ireland continuing to do better than the other euro zone members bailed out in the sovereign debt crisis -- Greece and Portugal both expect their economies to contract next year -- although the lower growth will put more pressure on the government's existing plans.
In Brussels Mr Noonan said Ireland would not follow Greece by missing the cutback targets, which could see as much as €4bn cut from this year's Budget to bring Ireland's deficit down to 8.5pc of gross domestic product (GDP).
Asked what the Greek slippage means for Ireland, Mr Noonan replied: "I don't think it means very much, Ireland is not Greece; we are very separate now in our economic progress and our vital statistics and I don't think there is any cross over effect."
Senior delegates from the troika will be returning to Ireland over the coming days for a review of progress on the bailout programme.
The review has been billed as "tougher" than the July exercise, and will focus heavily on spending and the Budget.
"I think they [the troika] will be happy with the positions we have taken," Mr Noonan said. "We have met the targets again for this quarter, a lot of legislation was part of the package in this quarter, and we have produced it."
Key areas of focus are likely to include the sale of state assets, efficiencies in the public service through a wage cuts and/or cuts to staffing and other ways to tackle the economy's "structural" problems.