Bloomberg News

Irish Central Bank Lowers 2012 GDP Forecast as Crisis Continues

February 02, 2012

(For more on Europe’s debt crisis, see EXT4 <GO>.)

Feb. 2 (Bloomberg) -- Ireland’s central bank lowered its economic growth forecast for 2012, as export growth slows and consumer spending falls.

Gross domestic product will rise 0.5 percent this year, before accelerating to 2.1 percent in 2013, the Dublin-based central bank said in its quarterly bulletin on its website today. The bank had forecast 2012 growth of 1.8 percent in October.

“The slowdown in the external environment has occurred against the background of an intensification of the sovereign debt crisis, the effects of which has now broadened beyond the financial system to the wider economy,” the bank said today.

Slowing growth in Ireland’s trading partners may hamper the economy as the government tries to cut the fiscal deficit. Still, Finance Minister Michael Noonan should achieve his target of narrowing the budget shortfall to 8.6 percent of GDP, the bank said.

“On the face of it, the consolidation measures announced, and the somewhat better starting position for 2012, should allow the targeted reduction of the deficit to take place,” the bank said. “But the pattern of growth will clearly determine developments to a degree.”

Personal expenditure is forecast to decline 1.5 percent this year, the central bank, led by Patrick Honohan, said. Exports will rise 3.9 percent in 2012, the bank said, lowering an earlier forecast of 5.2 percent, as the debt crisis ripples on. Unemployment this year will average 14.6 percent, the bank said, raising its forecast from 14 percent.

“Markets remain tense and output growth is weak,” the central bank said.

--Editors: Dara Doyle, Simone Meier

To contact the reporter on this story: Finbarr Flynn in Dublin at

To contact the editor responsible for this story: Colin Keatinge at

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