ULSTER BANK has revised upwards its economic forecast for the year, predicting Ireland will experience GDP growth of 1 per cent in 2010.
This compares to previous forecasts of a contraction of 0.5 per cent. But although the economy may be showing signs of improvement, there will be no “quick fix” for the jobs crisis, the bank said.
Ulster Bank said there have been indications that growth is occurring outside the multinational firms, with the output of “traditional” manufacturing segments, including the food and beverage sector, appearing to recover.
The bank said consumer spending is expected to record a positive second quarter as car sales and other sales volumes grew in the first half of the year.
However, gross national product (GNP) remains weaker, expected to contract 0.4 per cent, compared with a fall of 1.2 per cent previously predicted.
The banks said Irelands recovery is still primarily dependent on the export sector. The sector is vulnerable to a stalling in recovery in overseas markets.
“The export-led recovery now under way in Ireland reflects the pick-up in the global economy, which has been in recovery mode for over a year now,” Ulster Bank chief economist Simon Barry said.
“Of more concern are the indications of a slowing global economy, notably in the US where a series of recent economic numbers have disappointed to the downside. Our base case is that the global recovery will remain broadly on track, albeit at a gradual pace.”
The labour market, meanwhile, will weaken further in the short time, with unemployment continuing to climb, the bank said.