Bloomberg News

Irish Said to Cut Growth Forecast by at Least 1 Percentage Point

November 04, 2011

Oct. 28 (Bloomberg) -- Ireland’s government may cut at least 1 percentage point off its 2012 economic forecast, as a global slowdown curbs the country’s export-led recovery, according to two people familiar with the matter.

Finance Minister Michael Noonan said last month that the country may cut its gross domestic product forecast from 2.5 percent, published on April 29. The government details its medium-term budgetary outlook on Nov. 4 and may lower the forecast, according to the people who declined to be identified because the figures haven’t been finalized.

“Work is under way on the medium-term fiscal statement,” said Eoin Dorgan, a spokesman for Noonan, declining to comment on the growth forecasts.

Slowing global economic growth and Europe’s debt crisis is hampering the region’s recovery. French President Nicolas Sarkozy said yesterday his country’s economy will grow by about 1 percent next year, as he lowered an August forecast of 1.75 percent. In Ireland, Noonan has said the government may need more than the planned 3.6 billion euros ($5.1 billion) of budget savings, though “not an awful more,” to hit its 8.6 percent fiscal deficit target.

“Ireland is showing the characteristics which are required to put the economy back on the right track,” Brian Devine, an economist at NCB Stockbrokers in Dublin, said in a note on Oct. 26. “However, one must not forget that Ireland is recovering from the largest credit and housing bubble in OECD history.”

While Irish bonds delivered the world’s best returns during the past three months, they have pared gains on concern slowing economic growth worldwide will derail the government’s efforts to revive the country’s fortunes through exports. The yield on debt due in 2020 rose 52 basis points in October to 8.26 percent, albeit down from 15.5 percent in July.

--Editors: Dara Doyle, Craig Stirling

To contact the reporter on this story: Joe Brennan in Dublin at jbrennan29@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net


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