Irish recovery predicted by Commission spring bulletin
The Irish economy is expected to grow by 3.7% in GDP terms this year, according to the European Commission's spring bulletin.
The Commission's forecast also anticipated unemployment rising to 5% by the end of 2004.
After growth of 6.2% and 6.9% in 2001 and 2002 respectively, the Irish economy only grew by just over 1% last year.
But a recovery is predicted and, as well as picking up in 2004, the bulletin predicts that GDP growth will continue to improve in 2005, reaching 4.6% .
This would move Ireland towards 5% - a rate that is generally thought to be sustainable in the medium term.
Recent growth forecasts from the Economic and Social Research Institute predicted GDP growth for Ireland of 3.5% this year and 4.5% in 2005.
The report also predicted that slight gains in disposable income would benefit private consumption, but public consumption would be unlikely to grow much "in view of further spending restraints and the envisaged cut in public sector employment".
These expected cuts in public sector jobs are seen as the main contributory factor to rising unemployment. Reflecting on a rise in unemployment from 4.3% in 2002 to 4.6% last year, the Commission described Ireland's employment levels as "remarkably resilient".
It commented: "Employment is estimated to have grown 1.75% but about two-thirds of the net gains are accounted for by the public sector. In view of the aforementioned cut in public sector employment, this will not be repeated over the forecast period. "
"As a result, employment gains will be quite weak in 2004, while unemployment is projected to rise to some 5% before easing slightly the year after."
Growth in housing completion is expected to taper off after double digit growth last year.
