Bank of Ireland expects growth of 2.5 per cent in the Irish economy for the rest of this year, chief economist Mr Dan McLaughlin said today.
Speaking following the release of Central Statistics Office (CSO) figures that show weak growth with falls in exports and investment, Mr McLaughlin also forecast a drop in inflation to 2.5 per cent by the end of the year.
Looking forward, he said inflation should hold at this level in 2004, while growth would accelerate from 2.5 per cent this year to 5 per cent in 2004.
This growth will steady the unemployment rate at 4.7 per cent this year, although he admitted unemployment was likely to reach 5 per cent in 2004. Mr McLaughlin added that he believes Government borrowing will come in broadly on target.
Mr McLaughlin pointed to a recovery in equities and a rise in longer-term interest rates as support for the theory that a gradual global recovery is under way. US economic growth of over 3 per cent is expected thus year.
"Ireland has weathered the international downturn remarkably well, as evidenced by the modest rise in the unemployment rate, thanks to a combination of low interest rates and counter-cyclical fiscal policies, which sustained employment.
"The strength of bank lending, both mortgage and non-mortgage, is also not consistent with an economy as weak as often portrayed. This soft landing by the economy has been obscured by the confusion surrounding the divergence between GDP and GNP as measures of growth," Mr McLaughlin said.