Irish Economy 2012: The Central Bank today forecast that Irish GDP (gross domestic product) it will grow by 0.7%  this year, up 0.2 percentage point increase from its previous forecast. GNP (gross national product) mainly excluding the profits of the important multinational sector, will moderate to a contraction of 0.3%.

These forecasts, close to the margin with the multinational sector distorting both measurements, are more guesswork than science.

The Central Bank in its latest quarterly bulletin [pdf], says unemployment will average 14.7%  for the year.

The Bank says that an adverse impact of weakened external demand seems set to be particularly pronounced this year although the impact is likely to be partially offset by competitiveness gains, with further improvements in cost competitiveness envisaged throughout the projection period, albeit at a reduced pace relative to that of recent years. Some pick-up in the performance of exports is expected in 2013, assuming that the projected recovery in external demand is sustained.

The economists said that declining labour supply arising from net outward migration continues to mitigate the impact of declining employment on unemployment. However, this factor is set to be less significant both this year and in 2013 as participation rates, which declined sharply in recent years, show signs of recovery. Unemployment is projected to average 14.7%  this year declining slightly to an average of 14.4%  in 2013 in line with the projected increase in employment.

The Central Bank said that the most noticeable feature of Ireland’s trade performance during the year to the first quarter of 2012 was the sharp acceleration in services export volume growth, which served to offset the modest outturn on the merchandise side over the same period. The performance of services exports annually in the first quarter of 2012 proved considerably more buoyant relative to that of the quarter, with a volume increase of 11.9% , almost double that of the previous quarter. Moreover, the first quarter outturn represented the strongest such increase in services export volumes since the final quarter of 2007. Some divergence in services export performance was however evident at a sectoral level during the year to the first quarter of 2012 - - computer services exports accelerated appreciably while the performance of business services exports, Ireland’s second largest services exporting sector, also gathered momentum. These two sectors, when combined, accounted for approximately 87%  of services export growth annually in the first quarter of 2012.

The foregoing is the official position where fake exports related to the tax strategies of US multinationals are treated as regular exports, reflecting economic activity.

SEE: Irish Economy 2012: At least a third of value of Irish services exports is overstated

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