'Celtic Tiger' may be revived, says economic report

Bank of Ireland Group Treasury has forecast GDP growth of 4.5 per cent in 2004 and an average inflation rate of two per cent.

In its positive economic outlook for 2004 the bank says the Irish economy has the potential for 6 per cent growth "reviving the image of the Celtic Tiger which some had thought gone for good."

The GDP prediction was based on a rebound in exports, a recovery in business spending and a pick up in consumer spending, driven by employment growth and lower inflation.

Inflation may hit a cyclical low of 1.2 per cent in March before rising leading to an average of 2 per cent for the year, the report published today said. This is well below the 3.5 per cent average last year.

The growth forecast is above that of the Department of Finance. The bank expects exchequer borrowing to come in €1 billion below the Government's Budget forecast.

However, the report warns that interest rates may rise and that "risks always exist". The euro's strength against the dollar is a concern but would be unlikely to derail the upturn in the Irish economy.