A report from Goodbody Stockbrokers has predicted that while Ireland's economic recovery will lag behind those of other countries, the economy is likely to grow in 2011.
But it warns that the effects of the recession, particularly on unemployment, will linger, and Ireland must come up with new policies to preserve jobs.
Goodbody's latest forecast says the economy will shrink by 8.7% this year and another 4.6% in 2010. But it expects 1% growth in 2011. The report says an Irish recovery is dependent on an improvement in the world economy. It says there are signs that the rate of decline in the global economy is slowing, and that there will be 'modest' world growth next year.
Goodbody economist Dermot O'Leary believes the Irish economy will look very different from that of two or three years ago, with exports accounting for an increasing share of output.
He believes the unemployment rate will peak at 17.5% in 2011, and expresses concern about what happened in a similar situation in Finland in the early 1990s. 'Worryingly, when employment fell by this extent in Finland in the early 1990s, it took 18 years for it to return to its pre-recession level,' Mr O'Leary says.
The economist expects a 4% fall in consumer prices this year. On the public finances, his report says that while the April Budget 'started the ball rolling' in addressing the problem, but the process would take a number of years to complete.
Mr O'Leary said the lack of detail on NAMA was creating uncertainty among international investors about the cost to the State of fixing the banking system. 'Time is of the essence,' he adds.
