McCreevy warns of Irish economic downturn

Finance Minister, Mr Charlie McCreevy

Minister for Finance Mr McCreevy has said the Government will have to "soundly manage" the economy as the country felt the pinch of a global downturn.

Speaking at a Euro Changeover Information Campaign, Mr McCreevy said: "In the shorter term as we all know as a result of the events of recent times there is going to be a downturn".

"What we have to do is moderate our expectations to the existing situation [and] have sound management of the economy".

The Economic and Social Research Institute's Medium Term Review released today warns unemployment may rise rapidly and house prices may fall 15 per cent by 2003.

Up to 14,000 people could lose their jobs in 2002 across almost all sectors, the ESRI document said. The ESRI's bleak assessment is based on the knock-on effects here of a likely US recession following the attacks in New York, Washington and Pennsylvania two weeks ago.

Yesterday the Central Bank warned the terrorist attacks in the US could substantially reduce the growth level forecast for the Irish economy next year, saying the figure may be as low as 3.5 per cent.

In its quarterly report, based on data collected prior the World Trade Center attacks, the Central Bank predicted output growth this year would be about 6 per cent. This compares with a figure of 10.4 per cent for last year.

It said: "Most of the year’s growth represents a carryover from last year’s very strong performance".