Economic growth and fall in unemployment in 2013 – ESRI

The latest ESRI Quarterly Economic Commentary concludes that improvement in GDP growth this year, 2013, looks set to be more subdued than previously thought as global economic activity is weaker.

Growth in the Irish economy continues to be driven by the external sector. The positive growth of 2012 is expected to continue into 2013 and 2014. Growth as measured by GDP is estimated at 1.3 per cent for 2012 and is forecast at 1.3 per cent and 2.3 per cent in 2013 and 2014 respectively. Domestic demand remains very weak and is due to contract again in 2013 and 2014, though the pace of contraction is easing.

The final outturn for growth over the forecast period is heavily conditional on the performance of the European economy, which at present is very weak.

The public finance position improved in 2012, with the agreed targets being comfortably met. In 2013 the targets are more challenging, mainly on the expenditure side. The Croke Park extension talks are opening up important possibilities to help the process of reducing expenditure. The full effects of any reductions achieved are more likely to be felt in 2014. Nevertheless, in broad terms we think the fiscal targets can be met in both 2013 and 2014.

The rate of unemployment remains above 14 per cent. It is forecast to decline from 14.9 per cent in 2012 to 14.6 per cent in 2013 and 14.3 per cent in 2014. However, the main driving force behind this reduction is ongoing net emigration.