Ireland's GDP growth rate is expected to beat the average Euroland growth rate in 2004, according to a new report by economists at PricewaterhouseCoopers.
Irish GDP is forecast to grow by 3.5% for 2004 compared to the Euroland average of 1.5%. This growth rate in the euro zone compares to expected GDP growth of 4.5% in the US and around 3% in the UK.
PricewaterhouseCoopers says that expected GDP growth for Ireland is expected to pick up to around 4.5% in 2005, supported by more robust consumer spending growth as incomes are boosted by employment gains and low inflation.
It adds that Irish exports are also expected to accelerate in line with the anticipated international recovery, which should also feed through higher business investment.
The PricewaterhouseCoopers report says that Spain is likely to remain the best performer of the larger Euroland economies with growth of about 3% in 2004 and 3.25% in 2005.
The fastest growing Euroland economy this year is expected to be Greece with growth of 4.25% expected, thanks to the Athens Olympics. But the report warns that the Greek economy will then slow significantly in 2005.
The report says that German growth should pick up gradually to an average of 1.25% in 2004 and 2% in 2005, while the French economy is projected to grow at around 2% in 2004 and 2.5% in 2005.
PricewaterhouseCoopers says that risks to Euroland growth are still weighted to the downside and will not be helped by the continued relative strength of the euro and the recent rise in oil prices.
'The Euroland economic recovery is still very fragile, so this is not the time to be raising taxes or cutting spending, or to be tightening monetary policy,' commented Rosemary Radcliffe, Chief Economic advisor to PricewaterhouseCoopers.
'Although the ECB seems likely to keep interest rates on hold for the moment, they need to stand ready to cut rates again to keep the recovery on track is there should be sings that it is faltering,' she added.
