Central Bank forecasts another surge in employment growth
Exports to be main driver of recovery but domestic demand to play significant part
The Central Bank has predicted GDP growth of 3.2 per cent for 2015. Photograph: The Irish Times
The Central Bank is forecasting another surge in employment this year underpinned by an acceleration in export growth and a recovery in domestic demand.
In its second quarterly outlook of 2014, the bank predicted unemployment would fall from 13.1 per cent in 2013 to 11.3 per cent this year, and to 10.4 per cent in 2015.
The rate of jobs growth in Ireland’s post-crash economy has confounded economists as it has coincided with a contraction in domestic demand.
Last year, a 2.4 per cent jump in employment growth saw the creation of additional 60,000 jobs in the economy.
This year, the bank is forecasting employment growth will be even stronger, accelerating to 2.6 per cent.
In its commentary, the Central Bank noted that unemployment has come down from a peak of more than 15 per cent to just below 12 per cent in about two years.
“Initially, the recovery in employment was confined to part-time jobs. However, recent quarters have seen steady growth in full-time employment, which seems broadly based.”
“ Signs of improvement are also visible in investment data, business and consumer survey measures and in more positive retail spending data,” it said.
In its report, the Central Bank said it expected the economy to grow by 2 per cent this year, revised downwards from the 2.1 per cent in its last bulletin.
The downward correction was linked to the ongoing impact of the so-called patent cliff in the pharmaceutical sector.
The bank predicted growth in gross domestic product (GDP) would, however, accelerate to 3.2 per cent in 2015 as the impact of the patent cliff diminishes.
Gross National Product (GNP), which strips out the profit flows of multinationals, is expected to grow by 2.7 per cent this year, and by 2.6 per cent in 2015.
In its commentary, the bank said exports would be main driver of growth.
However, it predicted domestic demand - which has been extremely weak up to now - would play a significant part in recovery as households spend more on the high street.
“The global economy has strengthened driven largely by growth in advanced economies,” it said.
However, it warned that while growth in the euro area was sustained it remains weak.