Central Bank sees pace of economic decline easing
The Central Bank has said the pace of the Irish economy's decline is likely to ease in the second half of this year reflecting signs that the downturn in the broader international and European economies may have reached a turning point.
However in its latest quarterly economic bulletin issued today the bank said the weakness in Irish economic activity was likely to persist into 2010, and emergence from the downturn was likely to hinge on the recovery of our main trading partners.
The bank forecast a fall in GDP of 7.8% for this year - a marginal increase on the 8.3% decline forecast in July.
The annual rate of decline was 8.4% for the first six months of 2009.
"The moderation in the rate of decline in output is likely to continue into the first half of next year with the prospect of stabilisation followed by some recovery in the second half of the year," the bank said.
GDP is forecast to decline by 2.3% for 2010 as a whole, with a return to modest, sustainable growth in 2011.
"The main risk to this outlook relates to the sustainability of the recent incipient recovery in world demand which remains fragile," the bulletin said.
"A sustained recovery in external markets, should it emerge, would support a modest recovery in underlying export growth. In the domestic economy."
However the contraction in activity is set to continue through next year, with the weak outlook for disposable income weighing on consumer demand and leading indicators pointing to a further decline in fixed investment.
The bank said the outlook for the labour market remains unfavourable, with wages set to fall in the private sector and the unemployment rate predicted to average 14% in 2010.
