Last year was a difficult one for growth in the Irish economy, according to the Department of Finance's annual review for 2003.
While GDP increased by 6.9 per cent, this was largely down to very strong output growth in the mainly foreign-owned, less labour intensive sectors where the returns to production largely accrue to non-residents.
The GNP measure, which relates more directly to the domestic sector, recorded an increase of just 0.1 per cent last year, the lowest growth rate of this variable since the mid-1980s.
In 2002, the review says, GDP was boosted by unusually strong multinational profits that had limited implications for the rest of the economy.
Blaming for the large part the poor global economic environment for today's figures, the review also noted domestic demand was also sluggish last year - reflecting a slowdown in growth in personal consumption.
This, in turn, was due to more moderate growth in disposable incomes and concerns about employment prospects, together with increased uncertainty. The slower growth was associated with further pressure on the public finances.
Despite this the the labour market remained relatively resilient, with only a modest rise in the unemployment rate, although private-sector employment did not grow last year.
In overall terms, the review says, the outlook for 2003 is less favourable than assumed at budget time.
In summary, while there are difficulties in assessing the picture:
- GDP is forecast to grow by 1.5 per cent, with GNP growth of 1.5 per cent also
- Employment is projected to rise by 11,000 (0.6 per cent), with the unemployment rate averaging 5.2 per cent for the year as a whole
- Annual inflation, as measured by the Consumer Price Index, is forecast to average 3.6 per cent this year
- A General Government Deficit of about 1 per cent of GDP is in prospect
- The debt/GDP ratio is forecast to remain broadly stable at 34 per cent
- The current account of the balance of payments is likely to record a deficit of the order of -1.5 per cent of GNP mainly due to a significant drop in the merchandise trade balance.
There is little to be done to change these facts, the review concludes, but it is essential the economy regains some of the lost ground in relation to competitiveness in order to protect jobs and attract new ones.