Economic growth will return next year -- IBEC
Business representative group IBEC is predicting the economy will return to growth next year, despite the greater than anticipated scale of the fiscal adjustments needed over the coming four years.
In its latest quarterly economic trends, published today, IBEC says that while the 2014 deficit target of 3pc of gross domestic product (GDP) is "challenging", it believes it remains achievable and that the Irish economy can grow by over 2pc in 2011.
"Although we have pared back our forecasts somewhat to reflect the impact of a series of more difficult than expected Budgets, we still see the economy growing by over 2pc in 2011," said IBEC chief economist Fergal O'Brien.
"The additional fiscal consolidation needed over the next four years is about 5pc of GDP and this is likely to have a growth-dampening impact of about 1.5pc to 2.5pc over the period."
The IBEC quarterly-trends publication noted that this time last year, the Government expected GDP to contract by 1.3pc during 2010, but that it now appeared GDP would remain essentially flat for the year.
Davy Stockbrokers last week forecast that Ireland's GDP would grow 1.9pc in 2011, following a 0.3pc rise this year.
Gross national product, which includes net income from abroad, will climb 1.2pc next year, according to Davy.
The broker's economist, Aidan Corcoran, said exports would be the only contributor to growth.
Yesterday, UCD economist Colm McCarthy, who headed the An Bord Snip Nua review, predicted that the International Monetary Fund could be running the country by February, if the upcoming Budget failed to convince financial markets that the Government had done enough to plug the deficit.
"The long-term economic interests of the country are best served by setting out a credible four-year plan to reduce the budget deficit," added Mr O'Brien of IBEC.
"The over-riding priority is that we preserve the country's credit worthiness and retain control over our economic affairs."