Quarterly Economic Commentary, Autumn 2003

10/10/2003

Quarterly Economic Commentary, Autumn 2003

Embargo: Friday October 10th, 2003 at 00.01a.m.
By Daniel McCoy, David Duffy, Adele Bergin, Joseph Cullen.

Some of the main findings of the analysis include:

  • Our forecast for output growth in 2003 is 2.2 per cent in real GDP and 1.9 per cent real GNP terms. The corresponding growth forecast for 2004 is for the economy to be still significantly below potential, growing at rates of 3.1 per cent for GDP and 3.2 per cent for GNP.
  • Labour market conditions are deteriorating in 2003, albeit less than previously expected, given the lagged impact of an economy growing below its potential. We forecast the unemployment rate to average 4.7 per cent in 2003 and 5.1 per cent in 2004. Inflationary pressures are expected to continue to unwind and we expect consumer price growth to decline from an annual average of 3.7 per cent in 2003 to 2.6 per cent in 2004.
  • The re-emergence of Government deficits, which has been primarily due to cyclical factors, does not constitute a problematic development but it does require that Budget 2004 be framed to support the economy in getting back towards its potential growth rates whilst ensuring that all public expenditure constitutes value for money.
  • Securing a continuation of social partnership wage bargaining will be difficult, not least because the conjunction of Benchmarking and Sustaining Progress pay awards to public sector workers at the start of 2004 will contrast sharply with the private sector pay increase at that point. It becomes an imperative then that the proposed productivity improvements in return for the Benchmarking elements are verifiable and transparent, to reinforce the economy-wide need for sustainable, productivity-justified pay.

Members of the Press are invited to attend a Press Briefing to be held at the ESRI on Thursday 9 October,  at 11 am.

For further information contact:
Danny McCoy ESRI @ 6671525 (office) or 087 634 9602 (mobile)
David Duffy ESRI @ 6671525 (office) or 087 219 6950 (mobile)
Adele Bergin ESRI @ 6671525 (office) or 086 361 3712 (mobile)
Joe Cullen ESRI @ 6671525 (office) or 087 244 7105 (mobile)

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