Export sector to play pivotal role as IBEC forecasts growth of 1pc
THE Irish economy will grow 1pc this year, employers' group IBEC has predicted, beating government forecasts of a 0.7pc rise.
Releasing its quarterly economic outlook today, IBEC expects the growth despite continuing political and economic uncertainties plaguing the eurozone.
"Investment by industry in new equipment and machinery will grow again this year, reflecting the strong export performance of recent years and Ireland's ongoing attractiveness to FDI investment," said IBEC chief economist Fergal O'Brien.
"The jobs outlook has also improved somewhat over recent months and the export recovery has meant that job creation has exceeded job losses for the first time since 2007."
IBEC says that Ireland's export sector will continue to play a pivotal role in 2012 in shoring up the economy as domestic demand remains weak.
However, export growth this year is also likely to be lower than in 2011 after the UK slipped back into recession and the eurozone heads the same way.
"The improved outlook for the US and a much more favourable exchange rate environment will help offset some of these difficulties," according to IBEC. "The weaker euro will also be a major boon to those companies making inroads into third-country markets such as China."
The business body said Ireland would benefit significantly from a weaker euro as it would "substantially lift" the competitive position of the growing share of exports from Ireland which are destined for countries outside the eurozone. The euro hit a three-month low against the dollar yesterday.
Export growth from Ireland was 3.6pc in the first quarter of this year, the Irish Exporters' Association said last week. That isn't enough to create new jobs, it claimed.
The IMF is predicting that Ireland's economy will grow by 0.5pc this year. The Government's most recent 0.7pc forecast was cut from a previous 1.3pc growth estimate.
IBEC also believes that 2012 will witness the "end of the downward trajectory" in consumer spending, with a "modest recovery" likely from next year. The rate of job losses within the economy appears to have stabilised, with the unemployment rate unchanged in April at 14.3pc, according to figures released last week by the Central Statistics Office.
"The domestic economy remains fairly fragile and we expect that reduced net incomes and relatively weak confidence will mean that consumer spending will fall by a further 2pc this year," said the IBEC report, which has called for a Yes vote.