– Leading think tank forecasts strong economic growth in Ireland, ignores global risks
– Impact of Euro zone debt crisis and global geopolitical risk underestimated
– Global macro-economic, systemic, geo-political and monetary risks largely ignored
– Risk that lulls politicians, investors and people into false sense of security … again
Ireland’s leading economic think tank, the Economic and Social Research Institute (ESRI) has issued its latest quarterly report in which it forecasts that the strong economic performance in Ireland is set to continue.
It has forecast strong economic growth of 4.4% this year and a lower but still strong 3.7% next year. It says it expects unemployment in Ireland to drop below 10% this year for the first time since 2008 and as low as 8.4% next year.
The report said the economy is now growing so strongly that Ireland’s budget deficit could be virtually eliminated by next year – two years ahead of schedule.
The economy was supported by the first growth in consumer spending since the start of the recession. Consumer spending grew by 1.1 per cent last year, and the think tank forecasts this to rise to 2 per cent this year.
However, the think tank does acknowledge that it will be constrained by the still very high levels of household and mortgage debt, by people prioritising debt repayment over consumption, and by the still falling level of consumer credit from Irish banks. (more…)