Ireland is facing further economic
woe after new figures defied forecasts of modest growth.
The country’s central bank said the
economy would barely grow this year.
Gross Domestic Product (GDP) – a
key measure of the value of goods and services – is expected to increase by
just 0.2 per cent this year, according to the latest quarterly bulletin.
That compares with an earlier
prediction of 1 per cent growth by the government.
A weaker economic backdrop will
make it even more difficult for Prime Minister Brian Cowen’s government to
tackle the worst budget deficit of any country the European Union, as
international concerns about the Republic’s finances mount.
Ministers recently warned that the
huge cost of bailing out the country’s banks would increase Ireland’s deficit
to 32 per cent of GDP this year.
The Gross National Product (GNP)
figure, which measures Irish-only industry and gives a better picture of the
domestic economy, is expected to drop by 1.7 per cent this year, the third
consecutive year of decline.
The central bank expects GDP to
grow at 2.4 per cent and GNP at 1.7 per cent next year, but it warned these
figures hinge on global economic growth.
Faced with a $68 billion bank
bail-out bill and the high cost of government borrowing, the bank said Ireland
now needed to get banks back to normal and regain lost competitiveness.
The government has been told it
needs to find savings of $4.1 billion in its December budget.