No early jobs recovery - Central Bank

News At One: David Murphy, Business Editor, reports that the Central Bank predicts some growth but not much and there is very little change to unemployment next year
One News: David Murphy, Business Editor, reports that the Central Bank has raised its forecasts for the Irish economy this year

Friday, 30 July 2010 14:48

The Central Bank, in its latest report, has raised its forecasts for the Irish economy this year, though it warns that unemployment will not start falling until next year.

The bank says a strong performance by exporters, in particular multi-national companies, has made up for continuing weakness in the domestic economy.

But it expresses concern that high debt levels in many countries and continuing worries in financial markets could slow, or even de-rail, the international recovery.

The bank's quarterly bulletin forecasts that the Irish economy, as measured by gross domestic product, will grow by 0.8% this year, though gross national product will fall by around 1%. GNP excludes profits made by multi-national companies here. These forecasts are better than the bank's previous forecasts in April.

The bank is forecasting growth of 2.2% to 2.8% in both measures next year.

It says the unemployment rate will average 13.5%, with only a gradual improvement next year, when it expects the rate to fall to 13.3%.

The bank repeats its view that the Government must stick to its targets for tackling the budget deficit, as this will help to contain borrowing costs.

It says that, while the country's competitive position is still improving, some of this is due to a shift away from construction, and the underlying improvement is not as great. It calls for continued wage restraint.