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IBEC downgrades growth forecast amid ‘challenging’ conditions

The business group believes the economy will not live up to Department of Finance predictions this year.

Image: Mykl Roventine via Flickr

BUSINESS GROUP IBEC has downgraded its growth forecast for the Irish economy this year, warning of a “challenging economic outlook” in 2012.

The group now predicts that Ireland’s GDP will grow by just 0.9 per cent this year. This is significantly below the official Department of Finance prediction of 1.3 per cent.

Consumer spending is also forecast to fall two per cent, the industry body said – but should rise by 0.5 per cent in 2013.

In its first Quarterly Economic Outlook of 2012, IBEC calls on the Government to introduce “ambitious new stimulus measures” to create jobs.

It said measures allowing people to access some of the money in their personal pension schemes before they mature could release €1.3billion into the Irish economy.

“It is vital that Ireland continues to invest and plan for the future,” said IBEC director general Danny McCoy. “The overriding priority for 2012 must be getting people back to work. This requires radical new thinking from both the Government and troika.”

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The group welcomed the ECB’s decision to further reduce interest rates, saying this would result in a 6.5 per cent increase in the discretionary income of mortgage-paying households.

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