Outlook positive for Irish economy
At the Friends First quarterly economic outlook, it has been predicted that employment in Ireland will grow by 55,000 in the next year, despite a decline in domestic manufacturing.
Other good news for the Irish economy was that GDP is to be revised upwards to 5.5% and GNP upwards to 5.2%, while global growth has eased in first half of 2005.
Irish exports are expected to deliver growth of 5.8% in the "'most challenging investment environment in the last decade'.
Speaking at the launch of the Quarterly Economic Outlook, Jim Power, Chief Economist, Friends First said: "Investors today are in the most challenging investment environment of the last decade. Low interest rates and an advanced residential property market have prompted increased commitment to investing abroad.
"Equities are showing potential for better return in the medium term, while demand for bonds remains strong. The economic outlook for the remainder of 2005 is positive, with consumer confidence high.
"However, the performance of the manufacturing sector merits concern, with the future of the sector threatened by state driven cost increases, sustained competition from Eastern Europe, India and China and the significant loss of cost competitiveness in recent years."
Increased costs for manufacturing companies in Ireland and sustained competitive pressure from China and India have contributed towards a decline in manufacturing in the Irish market.
"Manufacturing output showed an annual decline of 6.5% in the year to April, with the ‘modern sector’ down by 8% and the ‘traditional’ sector down by 3.2%. Unless there is a significant recovery over the remainder of the year, manufacturing output could record its first annual decline since 1982.
"Competition from other countries looks set to intensify over the coming years, resulting in continued pressure on the Irish manufacturing base.
"In the immediate future, the recent weakness of the euro should provide some solace to the sector, but there are longer-term structural issues at play that will have to be addressed."
According to Mr Power, upskilling the workforce to adapt to the changing global environment is essential.
"It is inevitable that manufacturing jobs will continue to be shed and the challenge will be to replace these jobs with higher value added jobs in areas such as bio-technology, medical devices, financial services and the IT industry.
"This will require serious investment in education and training, but of equal importance would be the need to have a structured immigration policy designed to target the skills that the economy requires to exploit its longer-term economic potential," said Mr. Power.
