Ulster Bank has become the latest to upgrade its assessment on how it expects the Irish economy to fare this year.
The bank says it now expects to see the economy contract by 0.5% this year compared to a previous forecast of 2.8%. It also predicts that the Irish economy will be back to positive growth territory by the fourth quarter of 2010, which would be the first positive growth in three years.
Ulster Bank maintains that the key driver to growth here will be due to external factors. It points out that growth forecasts in Ireland's main trading partners have been steadily improving in recent months and each of the euro zone, UK and US economies are now once again growing.
Today's economic outlook says that while the improving outlook for exports is beginning to filter through to the monthly PMI surveys of manufacturing and services activity, the construction sector here remains a 'clear laggard'.
The bank says that the home-building sector will remain a substantial drag on growth this year. It points out that house completions fell by almost 50% to 26,800 units last year and it forecasts a further substantial fall to around 10,000 this year.
It also says that house prices have further to fall and it predicts prices will see a total drop of between 45-50% from their peak three years ago.
Consumer spending is also still a cause of concern and Ulster Bank says it expects another year of decline, however the drop of 1.1% it now forecasts is lower than the 3% previously thought. It is also a marked improvement from the 7.4% fall recorded last year.
Ulster Bank also says that the unemployment rate has further to rise and says joblessness will peak at 13.4% by the middle of the year. This again is a slight improvement on the 14.5% previously forecast.
'The pace of job-shedding is easing but employment is still falling and it will probably be the final quarter of this year before we see net job creation re-emerge,' the bank says.
