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Meltdown: Ernst & Young predicts economy will shrink in 2011

Forget predictions of a modest growth – Ernst & Young’s forecast believes Ireland’s economy will contract by 2.3 per cent.

Image: Leon Farrell/Photocall Ireland

IRELAND’S ECONOMY WILL shrink by 2.3 per cent over the course of 2011, plunging the country into a ‘double dip’ recession, according to new estimates from one of the world’s largest professional services firms.

Ernst & Young’s prediction, reported by RTÉ, suggests that while Irish exports will continue to growth throughout the year, the continued weakness of the domestic economy will drag overall growth into negative territory.

While E&Y acknowledged that its forecast was relatively pessimistic and at the lower end of market expectations, it was also a “realistic” indication of the economic problems facing the country.

The forecast is the most negative one yet about Ireland’s economic prospects for 2011.

On a positive note, E&Y did predict that Ireland would secure a 1 per cent reduction on the interest rate it pays for its bailout loans.

Read more on E&Y’s forecasts at RTÉ News >

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Gavan Reilly

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