The Economic and Social Research Institute has warned that there will be no increase in employment in Ireland this year and that economic growth will slow to its lowest level for 20 years.
In its latest Quarterly Economic Commentary the institute says that difficulties for the US economy, and the continuing turmoil in the international financial markets, have compounded the challenges facing the Irish economy.
As a result the ESRI says economic activity in Ireland this year will be €3.1 billion lower than expected just three months ago. This is the most downbeat estimate of Ireland's economic prospects for 2008 published to date.
It comes after three months of deteriorating domestic and international economic indicators which the ESRI could not ignore.
The euro has gone up strongly in value, the US economy is heading towards recession and the turmoil on global financial markets has worsened. In addition, the slowdown in Irish house building is bigger than expected, and the Government's tax receipts are beginning to fall significantly short of target.
The consequence of all these factors for 2008, according to the ESRI, will be economic growth of just 1.6%, down from 4.6% last year. This means that overall, no new jobs will be added to the Irish economy for the first time since 1991. This is in sharp contrast to the almost 70,000 new jobs created in 2007.
The institute says it expects about 20,000 building jobs to be lost, but these will be offset by 20,000 job gains in the services sector. The report also predicts that net inward migration will fall by about 50,000 but that the numbers of people signing on the dole will still rise by about 32,000 in 2008.
The institute also says that a significant deterioration in the public finances will be difficult to halt. The forecast is for the Exchequer balance to deteriorate from a surplus of €2.3 billion in 2006 to a deficit of €7.5 billion in 2009.
