Video: Employers' group expects 'turning point' in economy
THE economy is likely to hit a "turning point" this year and a recovery will gain momentum throughout 2013, a leading trade group said yesterday.
Employers' group IBEC said domestic confidence was beginning to catch up with belief in the Irish recovery overseas, and this will help drive consumer spending over the next year.
The lobby group is forecasting GDP to grow by 1.8pc in 2013, and reckons the economy expanded by 1.2pc in 2012.
Its expectations are at the more optimistic end of GDP predictions seen so far. The Government itself is forecasting 1.5pc growth, while Goodbody Stockbrokers last week revised up its estimate to 1.6pc.
In contrast to domestic players, the International Monetary Fund is expecting the economy to expand by only 1.4pc in 2013, while the US firm Merrill Lynch said last week the Irish economy would improve by only 1pc.
IBEC's chief economist Fergal O'Brien said the forecast reflected better-than-expected growth in 2012.
"The economy performed better than many predicted last year. Exports had another record year and a number of indicators suggest the domestic economy has stabilised.
"Although many Irish households continue to grapple with debt and unemployment, there is growing evidence that 2013 could be a turning point. We are edging toward a deal on Irish bank debt, which could provide a much needed boost in consumer sentiment.
"Last year mortgaged households experienced an improvement in their purchasing power of about 3pc, as incomes stabilised and mortgage costs fell. While the property tax will put a further pressure on households, interest rates are set to remain very low and there will be some increases in incomes," he added.
Mr O'Brien's team claims employment will start to grow steadily in 2013, topping about 0.4pc. However, while the Live Register numbers will at least stop climbing, there is little sign of a significant fall in the Live Register for some time. Inflation will touch 1.5pc this year, but will remain below 2pc in 2014.
"Exports continue to perform strongly, despite difficult trading conditions. Importantly, we're seeing more businesses successfully making the transition from domestic sales to exports, and progress continues in developing new markets.
"This will lead to new job creation. Surging international investment in the sovereign, banks and utilities demonstrates that those outside of Ireland have growing confidence in our recovery. When Irish households start to have that same confidence, the recovery will gain greater momentum," said Mr O'Brien.
Already this year the Irish Exporters' Association said exports grew sharply in 2012, while Enterprise Ireland reported the first year of significant jobs growth since 2006.