Weaker euro helps boost economy and falling interest rates will cut mortgage costs
THE economy remains on track to expand by about 1pc this year despite difficult international market conditions, it was claimed.
Business group IBEC believes Ireland will benefit from the weaker euro more than any other eurozone country, ensuring exports drive gross domestic product (GDP) - the value of all goods and services being produced in the country - up.
Falling interest rates will also cut average mortgage costs by €2,000 this year, increasing the spending power of households, its latest quarterly economic outlook has forecast.
However consumer spending remains very weak and poor weather would further hit the domestic economy, Ibec said.
Fergal O'Brien, chief economist, said: "International trading conditions are tough at the moment given the sharp slowdown in almost all markets since the start of the year, but Irish exporters are faring relatively well.
"The weaker euro is a major positive for Ireland.
"When coupled with the hard gained competitiveness improvements of recent years, it means that Irish companies can grow both revenues and market share in what are largely stagnant international markets."
Mr O'Brien said Ireland sold 62pc of its exports to markets outside the eurozone last year, well above the average for other member states.
Elsewhere the annual average euro exchange rate this year against both the dollar and sterling is likely to be about 10% weaker than in 2011.
"The Irish economy will benefit more from this than any other eurozone country," he continued.
"This year, for the first time since 2007, the investment sector of the economy will not be a drag on growth.
"The improvement arises mainly from increased investment by firms in equipment and machinery, while construction sector activity is also closer to bottoming out."
Ibec said last week's successful bond auction also shows the substantial improvement in Ireland's reputation with international investors over the past year.
"Markets are responding to sensible policy decisions, namely the yes vote in the recent Fiscal Stability Treaty referendum and strong implementation of the Memorandum of Understanding with the troika," Mr O'Brien added.
"The major task for Government now is to restore activity in the domestic economy and get more people back to work."