Irish GDP growth to outpace euro zone

Irish economic growth is expected to be more than twice the euro zone average this year, according to forecasts from PricewaterhouseCoopers.

They predict that Irish gross domestic product will grow by 3.5 per cent this year, compared to the euro area average of 1.5 per cent.

Euro-zone growth is set to pick up gradually, reaching 2.5 per cent by next year, according to PwC, but it warns that the risks to growth are "still weighted to the downside". The euro zone's recovery "remains fragile", the report warns, "and will not be helped by the continued relative strength of the euro and the recent rise in oil and other commodity prices".

Continued strong international growth would help the euro zone, the report adds, but it warns that uncertainties remain about the sustainability of the US recovery.

Irish GDP growth will remain well above the average, the report says, and should pick up to 4.5 per cent by 2005. The recovery should be supported by more robust consumer spending growth as real incomes are boosted by employment gains and low inflation. Meanwhile exports should accelerate in line with the anticipated international recovery.

"The principal risks for Ireland's economy relate to the strength and timing of the assumed recovery of world trade," according to PwC, while competitiveness could be damaged by any renewed appreciation of the euro or by an acceleration in wage growth.