EU Commission predicts Irish economic downturn

The EU Commission has predicted growth in the Irish economy will slow down sharply next year but would "stay significantly above the EU average".

However it also predicted the economy would recover again in 2003.

In its Autumn economic forecast the Commission forecasts GDP growth of 11.5 per cent last year would fall to 6.5 per cent this year.

It predicted growth would fall to 3.3 per cent next year before rising to 5.5 per cent in 2003.

The Commission ties the slowdown this year to a series of external shocks including the foot-and-mouth outbreak and a global recession.

It said the economy also suffered from the downturn in the high-tech sector, mainly due to a reliance on inward investment from the US.

The Commission’s predictions echoes those made the Organisation for Economic Co-operation and Development yesterday. The OECD said Irish growth would fall substantially next year as the first global recession in more than 20 years slows the world economy.

The OECD has also warned that a combination of continued wage growth and a strong rise in the value of the euro represents the greatest risk to the Republic's capacity to capitalise on eventual economic recovery.