Quarterly Economic Commentary, December 2001

December 20, 2001

Quarterly Economic Commentary, December 2001

Daniel McCoy, David Duffy, Jonathan Hore, Conall Mac Coille

Some of the main findings of the analysis include:

  • The outlook for the Irish economy depends upon the speed of recovery in the international economies about which considerable uncertainties remain. The Irish economy is estimated to have grown by 6.6% in real GDP and 4.7% in real GNP terms in 2001. Our forecast growth in 2002 for real GDP and real GNP is 3.0% and 2.1% respectively.
  • The unemployment rate is forecast to exceed 5% during 2002, averaging 4.7% for the year while inflation in consumer prices is expected to average 3.7% next year. The public finances will deteriorate significantly compared to recent years, though in contrast to most EU countries the important general government surplus while declining will be in surplus.
  • Budget 2002 is considered to be mildly stimulatory, which is appropriate for the Irish economy at the current juncture. The new phase of lower growth in the economy means that real choices, postponed through the period of rapid growth, between increased public expenditure and increased taxation must be addressed. Otherwise the spectre of widening government deficits will limit the ability to cope with unexpected shocks the economy may experience in the coming years.
  • The tangible arrival of the euro at the start of the New Year helps cement the link between Ireland and the European Union. Given the proposed "Big Bang" enlargement of the EU to include ten transition nations, the need to refocus on Ireland’s competitive advantages and changing industrial base will become paramount throughout next year and beyond.

Members of the Press are invited to attend a Press Briefing at the ESRI on Wednesday, December 19th at 11a.m.