Quarterly Economic Commentary, Summer 2010
Dr. Alan Barrett, Dr. Ide Kearney, Jean Goggin, Thomas Conefrey (ESRI)
Some of the main findings of the analysis include the following:
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For 2010, we expect GDP to grow by ¼ percent in volume terms; the corresponding figure for GNP is for a fall of ½ per cent.
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For 2011, we expect GDP to grow by 2¾ per cent and GNP to grow by 2¼ per cent. While this return to growth is to be welcomed, it should be seen as a modest pace of growth.
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One reason for describing the 2011 growth forecast as modest relates to our expectation that employment will not grow between 2010 and 2011. Instead, we expect the number employed to average close to 1.9 million in both 2010 and 2011.
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In spite of the stability in the numbers employed, we expect unemployment to fall between 2010 and 2011, averaging 13¼ per cent in 2010 and 13 per cent in 2011. This expected fall in the rate of unemployment is related in part to expected migratory outflows – 70,000 in the year ending April 2010 and 50,000 in the year ending April 2011.
- We expect the General Government Deficit to be 11½ per cent of GDP in 2010. Including the cost of the bailout monies for Anglo Irish Bank and INBS, this figure would be 19¾ per cent. For 2011, we expect the deficit to fall to 10 per cent of GDP. This is based on the assumption that a full €3 billion package of austerity measures is implemented in the 2011 budget.
- In the General Assessment, we discuss the government’s plans for further fiscal austerity measures. Given the vulnerability of the Irish economy to the vagaries of market sentiment on our sovereign debt, we argue that it is imperative that the government adhere to its programme of fiscal consolidation.
- Within the confines of this austerity programme, it is vital that whatever resources are available be used strategically to help tackle the growing problem of unemployment. We caution against the use of spending on infrastructure as a form of employment creation as the cost per job created can be large. Making longer-term investments in people through training and education programmes could be a more effective way of combating unemployment.
For further information please contact:
Dr. Alan Barrett, ESRI, 01 8632112 (office);
Dr. Ide Kearney, ESRI, 8632041 (office);
Jean Goggin, ESRI, 01 8632097 (office);
Thomas Conefrey, ESRI 8632104 (office).
Note to Editors:
1. The Quarterly Economic Commentary, Summer 2010, by Alan Barrett, Ide Kearney, Jean Goggin and Thomas Conefrey (ESRI), will be published online on the ESRI website on Wednesday 14th July 2010 at 00:01a.m.
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