Vol. 376 No. 6
asked the Minister for Finance if he accepts the Central Bank forecasts of negative economic growth next year, accompanied by rising unemployment; if so, the steps he proposes to take to ensure a positive growth rate in the economy in 1988; and if he will make a statement on the matter.
63.
asked the Minister for Finance the growth rate in the Gross National Product which is projected for the year 1988, assuming that tax rates and public spending remain at their present level.
I propose to take Questions Nos. 72 and 63 together.
I do not propose to comment on the specific forecasts made by the Central Bank or, indeed, by any of the other agencies which have thus far given their assessments of the 1988 economic outlook. Neither do I propose to publish at this time my Department's precise assessment of that outlook either on a preor post-budget basis. In accordance with established practice this assessment will be published around the time of the budget when the picture for both 1987 and 1988 should be much clearer.
However, the independent forecasts available suggest that, while growth in gross domestic product will continue next year, gross national product will show little change and, depending on the behaviour of net factor outflows, could indeed fall marginally reflecting, in part, the short term impact of the Government's budgetary strategy.
The Government's general budgetary strategy for 1988 is, however, strongly supported by most independent analysts. The Central Bank have stated that the firm steps which the Government have taken so far to rectify the condition of the public finances will, if maintained and followed through, lay the foundations for sound economic growth for the future. The Economic and Social Research Institute have made the point that the limited growth prospect in 1988 would appear to be a reasonable price to pay for a substantial change in the structure of the economy and that 1988 could come to be seen as a year in which the conditions for long term recovery were created.
Will the Minister agree that the latest unpublished ESRI forecast given to him — I think in the last week — shows that the downturn of GNP will continue into 1989 and may show some balancing out in 1990? Far from the optimistic assurances given to us today, the extraordinary deflationary policies followed by the Government have, effectively, knocked the bottom out of the economy for 1988 and 1989?
Do not get excited, Deputy.
I am not excited.
Exactly the same kind of accusations were made in March and April this year. The budget was published on 31 March and over the following weeks we were accused of adopting deflationary policies and that there would be negative — indeed minus — growth in the economy this year. I said the figures were based on a 1 per cent growth. The Deputy laughed, just as he did today, in relation to this matter. That figure has now changed to 1.75 per cent to 2 per cent. Because of the good management of the economy in the past nine months, and which will continue for the next number of years, we will succeed in going beyond, as we have done this year, the forecasts that were made.
May I ask——
I am moving to the next item, a Private Notice Question——
I wish to ask a final supplementary question. The Central Bank, the ESRI and even Allied Irish Banks have forecast that next year there will be at least a 1 per cent drop in GNP and in the following year, 1989, there will be a further 1 per cent reduction in GNP and that is not controverted by any officer of his Department or by any other independent commentator in the State.
I would not for one moment suggest that any responsible organisation such as the Deputy mentioned would be wrong. All I am saying is that for 1987 I was wrong, as were they.
They were not wrong.
We will just wait and see who will be right or wrong in 1988. I will be optimistic, unlike the Deputy who is pessimistic all the time.
I am not——
Order. Private Notice Question. Deputy Liam Kavanagh gave me notice of his intention to raise a Private Notice Question.
(Limerick East): Is the Minister going to frame a budget on a growth rate?
I will let the Deputy know on the day.
Deputies, please.
It will be much better than the budgets the Deputy's party introduced in the past four years.
Deputy Liam Kavanagh's question is in order. Will he please put his question?
