The Central Bank says the pace of decline in economic activity is moderating, and Ireland will likely experience a modest recovery during the course of next year, indicating that the worst of the recession may be over. In its quarterly bulletin published today, the Central Back predicts that following a 3 per cent decline in GDP last year, a further decline of around 8 per cent is likely in 2009. It added that while there is the prospect of stabilisation followed by a return to modest growth during the course of next year, GDP for 2010 as a whole is projected to be about 2 ¼ per cent lower than this year, with a return to modest, sustainable, growth by 2011. It said the improvement would be dependent on a gradual improvement in the world economy. However, the Central Bank said Ireland's recovery from recession will be slower than elsewhere. It said Ireland's return to grown is contingent on our main trading partners’ economic recovery, which should help to support growth in Irish exports. However, it added that domestic demand is likely to remain weak until 2011 at the earliest. "The fallout from the unwinding of the large domestic imbalances created during the earlier boom will continue to restrain economic activity and significant headwinds to recovery remain in place. These are projected to ease only gradually, and recovery, when it emerges, will at first most likely be modest. The outlook remains subject to considerable uncertainty," the bank said. "The contraction in economic activity since 2007 has been exceptionally severe. While the initial downturn in activity was driven by the sharp decline in the construction sector, this has broadened out into a marked weakening of domestic demand that was significantly amplified by the impact of global financial market turbulence, the collapse of world trade and severe recession in all our main trading partners," it added. The bank said the trend in key monthly indicators, along with evidence from sentiment surveys, suggests that the “most intense phase” of economic contraction occurred in the fourth quarter of 2008 and the first quarter of 2009. "While the economy is continuing to contract, the pace of decline has moderated from the rapid pace evident between last Autumn and this Spring," the Central Bank added in the report. |
