Economy will continue its slow growth, says OECD
The economy here will grow slowly this year and next year but still outperform the eurozone average, the Organisation for Economic Co-operation and Development said yesterday.
In a twice-yearly report on the global economy, the Paris-based think tank said investment has turned around, including in the housing market, and will grow solidly from a low base. Exports are also picking up while job creation will push down unemployment.
"Unemployment is falling, the economy is strengthening and domestic banking is improving," the report said, but warned that the percentage of debts not being repaid is the second highest in the European Union after Greece.
The OECD joined a growing chorus of outside organisations warning Finance Minister Michael Noonan not to stray from fiscal consolidation and urged the Government to "foster innovation across the whole economy" and to ease firms' access to capital. It predicts that the country will narrowly miss the target for pushing borrowing below 3pc of economic output.
That forecast comes just days after Mr Noonan said there could be room for tax cuts because borrowing may be reduced more than expected.
The think tank cut its global growth forecast as expansions in China and other emerging markets slow.
The world economy will expand 3.4pc this year instead of the 3.6pc predicted in November, it forecast. China will grow 7.4pc, down from a previous projection of 8.2pc.
"Part of this deceleration is benign, reflecting cyclical slowdowns from overheated starting positions," said OECD Chief Economist Rintaro Tamaki. "However, managing the credit slowdown and risks that built up during the period of easy global monetary conditions could be a major challenge."
The OECD's second reduction in global growth forecasts in six months underlines the challenges facing policy makers even as developed countries recover from the financial crisis.
The group also said events in Ukraine have heightened geopolitical uncertainty.
GDP in the euro arena will rise 1.2pc this year and 1.7pc next, the OECD estimated. That's up from the 1.6pc predicted in November.