Country has returned to growth, says McLaughlin
GROSS domestic product (GDP) has already begun to expand as industrial production and retail sales rise and exports remain steady, Bank of Ireland economist Dan McLaughlin said yesterday.
He said the economy had returned to growth in the first three months of the year, following eight quarters of contraction. This leaves GDP on track to expand by 1pc this year.
The forecast is more optimistic than many others, which see the economy returning to growth some time in the second half of the year. A later resumption of growth would mean that the economy had still shrunk in 2010.
"Industrial production has soared in the first two months of the year, with retail sales returning to positive growth in February, boosted by the car-scrappage scheme," according to Dr McLaughlin.
He added that a return to growth, if export-led, "may not have a huge impact on the Exchequer's finances but we expect the Budget to emerge broadly on target by year-end."
Inflation when measured by European rules which exclude mortgage interest rates may emerge again towards the end of the year as food prices begin rising again, the forecast said.
Dr McLaughlin is one of a growing number of economists who believe that the worst is over for the Irish economy.
Kevin Gardiner, who in 1994 invented the expression 'Celtic Tiger', said in February that the economy was slowly starting to stabilise after contracting more than any other eurozone member last year. "Having seen a huge fall, maybe we will see a period of stability in 2010 and some growth in the second half," he told a conference.
"Can it grow that quickly going forward?" Mr Gardiner asked. "I doubt it. I don't think it's appropriate to even think about tigers from here on."