Bloxham revises Irish forecasts up

The possibility that the US and the UK may return to growth this year has prompted Bloxham Stockbrokers to revise upwards its forecast for the Irish economy.

In its latest quarterly economic outlook Bloxham said it now expects economic growth (or GDP) to decline by 8.5 per cent this year, compared with earlier estimates of 9 per cent.

For next year Bloxham expects the economy to contract by 2.3 per cent which is a more upbeat assessment than previous forecasts of a 3 per cent fall.

Alan McQuaid, Bloxham economist, said confidence was returning to global financial markets and the impact of massive stimulus packages should lead to signs of recovery.

Mr McQuaid also said he was cautiously optimistic that the worst of the recession had passed.

Deflation in Ireland was likely to be more severe than earlier forecasts with a knock-on, positive, affect for Ireland’s competitiveness, the report said.

According to Bloxham sterling will appreciate back to the 80 pence level against the euro. At 2pm today it was trading at 85 cent and the weakness of sterling has created signficant pressures for Irish-based manufacturers exporting into the UK.

Mr McQuaid expects unemployment to average at 11.8 per cent this year and 14.2 per cent next year.

The Bloxham report expects a 12 per cent fall in house prices this year.

It also called on the Government to develop a more ambitious plan than just taxing the PAYE worker. “We have long felt that the Government should consider the sale of State assets” and up to €10 billion could be raised from this process.