Ireland forecast to be fastest growing economy in EU

The Government has nudged up its growth forecasts for 2015 and 2016 this Tuesday, setting Ireland up to remain the fastest-growing economy in the European Union as the government seeks to eliminate its budget deficit by 2018.

The Irish economy grew 4.8 percent last year, its best performance since 2007 and the fastest growth in the EU as the country continued to rebound from a debt crisis that forced it to seek an international bailout.

Momentum has continued into 2015 with data released on Tuesday showing retail sales volumes rose more than 9 percent year-on-year in March and residential property prices jumped nearly 17 percent.

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The government sees growth remaining above 3 percent for the next six years with the economy set to expand by 3.8 percent in 2016. The solid economic outlook prompted it to cut its forecast for the budget deficit this year to 2.3 percent of gross domestic product, comfortably below the EU limit of 3 percent of GDP, and down from a previous estimate of 2.7 percent.

It sees the shortfall narrowing to 1.7 percent of GDP next year, against a previous estimate of 1.8 percent.

Unemployment, expected to fall below 10 percent for the first time in over six years when data for April is released on Wednesday, is now forecast to drop to 9.6 percent this year and to 8.8 percent in 2016 when the government will seek re-election.

That marks a recovery from a high of 15 percent in 2012 when Ireland was in the middle of its three-year international bailout programme and compares to a forecast a year ago that it would take until well into 2016 for unemployment to fall below 10 percent.

If it hits its growth targets, the government said its gross debt will fall to 105 percent of GDP by the end of 2015 and below 85 percent by 2020 from a peak of 125 percent during 2013.

As a result, the government will have up to 1.5 billion euros extra in its budget for next year to divide evenly between tax cuts and additional spending, Finance Minister Michael Noonan said on Monday. Source: Reuters