There was mixed views on the Irish economy today as both Forfas and Price Waterhouse Coopers published major reports.
According to the latest European Economic Outlook from Price Waterhouse Coopers, the Irish economy is likely to grow faster than any other economy in the developed world during 2002.
The report says that Ireland is likely to show 'reasonable' growth of 3% this year, rising to 5% in 2003, representing almost double the Euroland average for these years.
However, Forfas has warned that 2002 will bring significant threats to economic progress in Ireland.
Today's PWC report also examines the impact of EU Structural and Cohesion Funds in Ireland, Greece, Portugal and Spain and concludes that the direct economic effect of these funds have been modest for Ireland. It also said that there is little evidence that Structural Funds have made a substantial contribution to the reduction in economic disparities within the EU.
Among the Cohesion countries, only Ireland has been able to catch up with Europe's economic leaders but the report says 'the available evidence indicates that the Structural Funds have played only a minor role in this compared with Ireland's National Competitiveness Programmes.'
The Irish experience - and that of other regions receiving the funds - also suggests that projects aimed at developing human capital, as opposed to improving transport and other 'hard' infrastructure have a better chance of delivering a sustained improvement in economic performance, according to the report.
On the implications of enlargement of the EU, the report confirms that this will widen economic disparities within the Community.
The report also sees the average budget deficit in Euroland rising to around 2% of GDP as growth overall slows to below 1%. This compares to a predicted budget surplus in Ireland of 1% for 2002.
However, Forfas warned today that 2002 will bring significant threats to economic progress in Ireland.
In its End of Year Statement, the Government employment agency says that the rate of hourly wage increases in Ireland is now among the highest in the OECD. This comes at a time when cost containment is a priority for the survival of firms in the most difficult trading situation they have faced in over a decade.
Forfas says the current high level of inflation is also adding to a cost environment and further undermining the competitiveness of the traded sectors.
It also criticises the slippage that has occurred in addressing the infrastructural deficits in the economy across a range of areas - roads, public transport, telecommunications, waste management and other utilities. This has added further to the cost base of the traded sectors.
Ireland is also facing increased competition from other locations in Europe for employment creating investment - especially in those countries negotiating for EU membership.
Forfas said Ireland's industrial performance in 2001 was creditable, despite the unexpectedly high level of downturn in the world economy.
Total permanent full-time employment in manufacturing and internationally-traded and financial services in firms supported by the IDA and Enterprise Ireland fell by over 2,800 to a level of 285,000 last year - the first decline in employment in 10 years.
IDA client firms saw employment fall by over 3,800 to 137,300 in 2001 following a record increase of almost 15,000 in 2000. The level of employment in Enterprise Ireland client firms increased by almost 1,000 to 148,000 - the highest ever level of employment in this set of firms.
