"Economic growth to resume late 2010 - ESRI"

mathie

The economy will return to "very modest" growth in the second half of 2010, according to the Economic & Social Research Institute, which said it has become "more optimistic" about the unemployment outlook.

Gross domestic product will shrink 7.2pc this year and 1.1pc in 2010, the institute said in its quarterly report today. Its last report in July forecast contractions of 7.9pc and 2.3pc, respectively.

The economy stopped shrinking in the second quarter as company investment and consumer spending increased.

While the outlook may have improved, the recession has still left a budget deficit that’s set to be four times the EU limit this year. The ESRI said the government’s planned 2010 budget plan won’t be enough to narrow the shortfall.

The ESRI sees the deficit widening to 12.9pc of GDP this year, bigger than the 12pc forecast by the government, and expects it to be little changed at 12.8pc in 2010.

The government plan to save €4bn in the budget will stabilise the deficit “but will not reduce it,” said the ESRI.

Still, €4bn is the “appropriate fiscal target for next year,” it said. While tax increases should form part of the savings, the “balance of adjustment should be made on current expenditure.” Finance Minister Brian Lenihan aims to cut the deficit to the EU limit of 3pc of GDP by 2013.

Unemployment, currently at a 14-year high of 12.6pc, will peak at “close to 15pc,” the report said.

Consumer spending will drop 7pc this year and 2pc next year, while investment will fall 15pc in 2010 after plunging around 30pc this year, it said.

- Colm Heatley



http://www.independent.ie/business/irish/economic-growth-to-resume-late-2010--esri-1911828.html

Any thoughts?

ednwireland

woohooo - sorted

triple-M

cool,lets all go out and buy new cars

Amhran Nua

Where will this growth come from, specifically? Do they expect a resumption of the housing boom, and if so how are they viewing that as a real growth in the economy rather than a growth in private debt? The tax take and the economy are not the same things.

Long Onion

Why are so many people of the opinion that for the economy to recover, the housing sector must first rally? Surely this would leave us back in the same, untenable position again.

There are many other areas of the economy that could lead to a recovery without the ressurection of the housing boom.

Amhran Nua

Long Onion wrote: »

There are many other areas of the economy that could lead to a recovery without the ressurection of the housing boom.

Yes, but which ones do the ESRI expect to lead this recovery?