Global recovery to boost exports - report

DOMESTIC DEMAND in Ireland is likely to remain weak but the global recovery from the recession should boost Irish exports and drive recovery, a new economic survey said yesterday.

However, it was too early to say the recession in Ireland was at an end, the report said.

Bank of Ireland’s Quarterly Economic Outlook also revised its forecast for gross domestic product (GDP) growth for the next year, now estimated at 1 per cent up from a previously flat reading. GDP is expected to contract by an average of 6.5 per cent for 2009.

The report said it was expecting exports to rise in the coming months and grow more strongly in 2010.

“This export-led growth remains the most likely driver of an Irish recovery as some key components of domestic demand remain weak. Consumer spending, for example, has been constrained by falling employment, flat to negative wage growth, a rise in the tax rate and a rise in the savings ratio,” said Bank of Ireland chief economist Dan McLaughlin.

A previous economic forecast had said that the worst may have passed for the economy.

Mr McLaughlin said the bank was still optimistic that this was the case, with the contraction in GDP halting in the second quarter of the year.

The National Treasury Management Agency (NTMA) said it would hold a bond auction on Tuesday to raise up to €1 billion.

The auction will include 3.9 per cent bonds that mature in 2012 and 4.6 per cent bonds with a maturity date of 2016.

Last week, a new 15-year, €7 billion benchmark treasury bond was successfully issued. The NTMA has already secured some €24.5 billion through the bond markets this year and expects to secure a further €2 billion in bond auctions to be held in the coming months.