The Central Bank has lowered its forecast for economic growth this year and warned of uncertainty about the impact of outside factors.
In its latest quarterly economic bulletin, the bank says it expects gross domestic product to grow by 3% this year, with gross national product growing by 2.6%. These forecasts are down from 3.5% and 3.25% respectively in its previous report.
The Central Bank says a significant fall in house building and a slowdown in consumer spending growth will affect the economy this year, but growth should recover towards 4% in 2009.
The bank's report warns, however, that the impact of a slowdown in the US economy on other countries could be significant. It also cites the continuing turmoil on financial markets, volatility in oil prices and the weak dollar as other factors which are contributing to the uncertainty.
The bank says Irish growth remains strong by international standards, and adds that slower growth will reduce inflationary pressures. It also says that the slowdown in house building has had less impact on employment and overall construction output than might have been expected, most likely because of strong spending on infrastructure and home improvement.
