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Gloomy Davy forecast predicts lower growth for Ireland

DAVY Stockbrokers has cut its forecast for the Irish economy because of the risk of a more severe global slowdown and poor consumer sentiment at home.

Davy says that GDP will grow by just 1.1pc in 2011, down from its earlier forecast of 1.6pc.

It has also reduced its forecast for next year to 1.7pc from 2.4pc.

It says that growth remains split between the ''buoyant'' export sector and ''stagnating'' domestic demand.

Davy said that economic indicators in Ireland's main trading partners have deteriorated since the last forecast.

One of the main reasons for the cut in its economic outlook is the weaker demand for Irish exports.

It said that while a severe prolonged global slowdown would be very unwelcome for Ireland, our exports are very specialised and in niche sectors such as computer services and pharmaceuticals.

Davy also said that consumers have increased their level of saving and reduced their spending levels due to cuts in people's income.

The stockbrokers also said that a very slow recovery in employment growth means there is very little improvement in the unemployment rate.

It predicts the rate will fall to 13.9pc in 2010 from 14.3pc this year.