The Central Bank has revised down its growth forecasts for the Irish economy for this year.
In its latest quarterly economic forecast, the Central Bank says the effect of higher taxes and falling employment will depress consumer spending, keeping the economy weak.
This is the Central Bank's first commentary after the EU-IMF intervention and the Budget and it is predicting weaker growth than it had forecast in October.
It is now forecasting growth in Gross Domestic Product of just 1%, which is compared with the Government's estimate of 1.7%.
The Central Bank says Gross National Product, which better reflects the domestic economy, will stay in negative territory at -0.3%.
It says overall the economy will begin to grow gradually this year, but there will be no turnaround in employment until the very end of the year.
According to the bank, the unemployment rate will rise to 13.7% this year and will remain well above 13% in 2012.
Meanwhile, the labour force is set to contract by almost 1% this year.
Exports will keep growing this year but the level of growth, at 5.9%, will not be as strong as in 2010.
The bank also warns that cost competitiveness needs to be boosted further and says that unit labour costs have not come down enough.
The existence of an external funding programme in no way changes the need to rebalance the State's finances and close the gap between income and expenditure, it added.
