By Geoff Percival
Monday, January 21, 2013
This year is likely to be the turning point for the domestic economy, with GDP set to grow by nearly 2% and the unemployment rate stabilising, Ibec has said.
In a characteristically bullish economic outlook, the employers’ representative claims that final GDP figures for 2012 — provisional data for which is due next month — should show 1.2% economic growth for the year, meaning that Ireland would rank as the eurozone’s second-fastest growing economy, behind Slovakia, over the past 12 months.
The body also believes 2012 will rank as the last year of falling employment levels, with a return to marginal growth of 0.4% this year.
The unemployment rate, Ibec said, should stabilise but is likely to remain high for some time.
Additionally, Ibec is forecasting 1.8% growth for the economy in 2013 — slightly better than the Department of Finance’s 1.5% prediction and above most other high-profile commentators.
Ibec also sees inflation rising by an average of 1.5% this year and less than 2% in 2014 and sees investment increasing by about 10% in the next 12 months.
Investment in machinery and equipment is estimated to have increased by 8% in 2012, across both the technical and traditional sectors — the first time in five years that the investment sector was not a drag on economic growth.
"The economy performed better than many predicted last year. Exports had another record year and a number of indicators suggest the domestic economy has stabilised and is poised [for] recovery," said Ibec’s chief economist, Fergal O’Brien.
"Although many Irish households continue to grapple with debt and unemployment, there is growing evidence that 2013 could be a turning point for the domestic economy.
"We are edging towards a deal on Irish bank debt, which could provide a much needed boost in consumer sentiment.
"Last year, mortgaged households experienced an improvement in their purchasing power of about 3%, as incomes stabilised and mortgage costs fell.
"While the property tax will put a further pressure on households, interest rates are set to remain very low and there will be some increases in incomes."
Ibec’s economic outlook is the fifth such report issued in the past couple of weeks, with a consensus emerging amongst economic commentators of economic growth this year of between 1.5% and 1.8%.
Only the likes of Ernst & Young and the Nevin Economic Research Institute are forecasting little or no GDP growth in 2013.
© This appeared in the printed version of the Irish Examiner Monday, January 21, 2013