Irish Economy 2009: The Central Bank today published its first bulletin of 2009. The Bulletin indicates that against the background of exceptionally unfavourable global economic and financial conditions and a marked weakening in domestic demand, the Irish economy is facing into a second consecutive year of contraction and adjustment. The bank forecasts that GNP (gross national product) will fall by 4.75% in 2009.
In a statement issued with the Bulletin, the Governor of the Central Bank, John Hurley said:“We are in an exceptionally difficult period for the Irish economy. Our forecasts published today indicate a further serious downturn in the coming year. To support a return to more stable economic activity in the medium term, difficult decisions have to be taken and implemented now. In particular it is vital that we move to correct the sizeable deficit in the public finances and that we improve our competitiveness position, which is all the more important in the light of the global downturn. This is essential to support employment and investment in the future.
“The government and social partners have demonstrated a commitment in the past to dealing with these issues and we are now seeing that commitment again. Clearly, the discussions in the coming days will be critical. It is important that they take account of the changed outlook for inflation and the extremely difficult situation facing the public finances. It is also necessary to consider how the tax base might be broadened. While this will require painful choices, that will result in a short-term decline in living standards, it is also important that the measures taken are equitable and that the community as a whole benefits from this over the medium-term. With the right approach now we have the potential to grow solidly again.”
The Central Bank is forecasting the following data for 2009:
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A decline in GDP of 4%
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A decline in GNP of about 4.75%
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A sharp rise in unemployment likely to average over 9pc of the labour force
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Consumer Price Index to fall about 2pc in 2009
The bank said against the background of exceptionally unfavourable global economic and financial conditions and a marked weakening in domestic demand, the Irish economy is facing into a second consecutive year of contraction and adjustment. The output of goods and services produced in the economy, as measured by GDP, fell by about 1% in 2008, the first decline in the volume of Irish GDP since 1983. Reflecting higher than usual factor income outflows, especially in the second half of last year, GNP fell by considerably more than GDP in 2008, falling by about 2.75%.
The Central Bank said a moderate recovery in world demand is forecast by international organisations for 2010 with growth of about 1.5% cent on average in the advanced economies. This outlook, albeit subject to a high degree of uncertainty, could, together with a gradual levelling off in the contraction in domestic demand, support a return to a stabilisation of economic activity over the course of 2010.
