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Central Bank revises down economic expectations for 2012

Good news: GDP is to expand by more than expected this year. Bad news: GDP is to grow by less than expected next year.

Central Bank Dublin
Central Bank Dublin
Image: informatique via Flickr

THE CENTRAL BANK has increased its growth forecast for Ireland’s economy in 2011 but has lowered its expectations for next year.

In its latest economic quarterly bulletin, the Central Bank projects that Gross Domestic Product (GDP) will expand by about 1 per cent in 2011. That figure has been revised up from 0.8 per cent since its last quarterly bulletin in July.

However, GDP growth expectations for 2012 have been scaled back from 2.1 per cent to just 1.8 per cent.

Gross National Product (GNP), the measure of economic output that actually originates in Ireland, is predicted to contract by about 0.4 per cent this year before returning to growth of 0.7 per cent in 2012 (down from earlier predictions of 1 per cent expansion).

The Central Bank said the less optimistic figures for 2012 have been accounted for by less favourable prospects for external demand from the second half of 2011 onwards.

“Nevertheless, exports should continue to contribute positively to overall GDP growth both this year and in 2012, offsetting a continued, albeit moderating, decline in domestic demand,” said the report.

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At home, consumer demand remains very weak as it continues to be weighed down by declining disposable incomes and a high level of precautionary savings.

There was also a gloomy outlook on the unemployment rate with the Central Bank revising its earlier predictions of a fall to 13.9 per cent in 2012. The latest bulletin said next year’s rate will remain elevated at 14 per cent with a return to employment growth not expected until the middle of 2012.

Read the full Central Bank Quarterly Bulletin>

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