BOI revises economic outlook downwards
Bank or Ireland is forecasting that growth levels in the Irish economy will be more modest than expected this year.
In its latest quarterly economic outlook the bank has forecast the economy will grow by just 0.5% in 2011 - down from a previous forecast of 1.5%.
The report highlighted what it called “two surprising and unwelcome” economic trends released over the past month.
“The first was that the unemployment rate over the past six months has been much higher than previously published, on the basis that the labour force stopped falling in the final quarter of 2010," commented Bank of Ireland chief economist Dan McLaughlin, author of the report.
The bank said that this implies that the scale of net emigration "is much lower than previously thought".
The unemployment rate in 2011 is now expected to average 14.4% from 13.6% last year, although it has probably peaked in recent months, BOI said.
“The second data release showed that nominal GDP was deemed to have fallen by a massive 6.6% in just three months. The decline in real GDP was also a substantial 1.6%, driven by falling exports, contrary to the trend over the rest of the year.
“As a result, the economy entered 2011 in a weaker state than most expected and as a consequence we are revising down our GDP growth forecast for the year to a modest 0.5%.”
Mr McLaughlin said he expected most commentators as well as the Government to also adjust growth forecasts downwards in the coming months.
