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Central Bank revises downward forecast for economic recovery

Public sector employment is expected to fall this year but should be slightly outweighed by renewed expansion in private sector hiring.

Central Bank of Ireland on Dame Street, Dublin.
Central Bank of Ireland on Dame Street, Dublin.
Image: Informatique via Flickr

THE CENTRAL BANK of Ireland has revised down its forecast for the country’s economic recovery in its first Quarterly Bulletin for 2013.

The Central Bank said that while the forecast is for a continuation of the “gradual recovery” in economic activity, a slightly slower pace than previously predicted is expected.

While GDP growth is expected to rise to 1.3 per cent in 2013, this represents a downward revision of 0.4 per cent
to the previous forecast by the bank. GNP growth is projected to moderate to 0.5 per cent this year.

Though employment declined last year, the pace of decline was more moderate than in previous years, the Central Bank said. Public sector employment is expected to fall this year but should be slightly outweighed by renewed expansion in private sector hiring, it said.

Employment levels are expected to increase by 0.3 percent next year and 1.2 per cent in 2014. The Central Bank projects that the unemployment rate this year will be 14.5 per cent and will decrease slightly in 2014 to 13.9 per cent.

The bulletin said that weakening global demand has slowed Irish export growth and, given the on-going reliance on exports to offset domestic economic weakness, GDP growth has eased somewhat compared to 2011.

Weaker external demand is set to dampen Irish export growth this year compared to earlier expectations by the bank while domestic demand is forecast to continue along its slow path towards stabiliation.

A further decline in consumer spending is expected, though at a much more moderate pace than in recent years.

Read: Central Bank governor believes there will be ‘permanent loan modifications’>

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