Irish economy to be flat in 2013

Irish GDP growth downgraded from 1 to 0.1 per cent in Ernst & Young euro zone forecast

Irish exports forecast to help country’s return to growth by 2014. REUTERS/Rafael Marchante

Irish exports forecast to help country’s return to growth by 2014. REUTERS/Rafael Marchante

 

The economy will barely grow this year as the recovery in the euro zone remains uncertain, according to the latest forecasts from accountancy firm Ernst & Young.

Marie Diron, senior economic adviser for the company, said short-term growth prospects for Ireland were still weak, but should pick up significantly in 2014 and 2015.

Ernst & Young has cut its GDP forecast for this year from 1 per cent to 0.1 per cent but is expecting “sustainable” growth of 1.9 per cent next year, before the economy expands by 2.5 per cent in 2015.

For the euro zone, Ernst & Young expects a GDP contraction of 0.5 per cent this year, followed by sluggish growth of 1.1 per cent in 2014.

The export-led nature of the Irish economy, when coupled with continuing austerity, will leave it struggling this year, according to the analysis.

Ms Diron described this week’s sale of 10-year bonds by the National Treasury Management Agency as “very good news” for the economy.

“It is further evidence of investors’ confidence in the sustainability of public finances and cements Ireland’s restored access to financial markets.”

She said “achievements such as this” were driving the company’s forecast of a return to solid growth from 2014 onwards.

By this stage, Ireland will have one of the fastest export growth rates in the EU, the analysis finds.