Dáil Éireann Debate, Wednesday - 20 March 2013
196. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he continues to review the country’s economic prospects with particular reference to growth expectations in the future; and if he will make a statement on the matter. [14255/13]
View answerGrowth resumed in Ireland in 2011 and the economy is estimated to have recorded a second successive year of positive growth in 2012. Real GDP increased 0.8 per cent over the first three quarters of 2012 when compared with the same period in 2011. Provisional figures for the year as a whole will be published tomorrow. As is typical in small open economies, the traded sector is leading the recovery in Ireland with the services sector playing an increasingly significant role in export growth, owing much to the significant price and cost adjustments that have taken place in recent years.
There has been a significant improvement in economy-wide cost competitiveness. The European Commission is forecasting that Ireland’s nominal unit labour costs will have improved by 23 per cent relative to those in the euro area over the period 2008 – 2014.
We are still, however, facing many challenges. Domestic demand remains weak and is expected to contract again in 2013, albeit at a much slower pace than in the recent past. Households, firms and the government sector are still working through the imbalances built up during the boom. However, there have been some positive developments in recent months as core retail sales have stabilised and have now been in positive territory in year-on-year terms in each of the last six months.
The unemployment rate at 14.1 per cent in February is showing signs of stabilisation, albeit at an unacceptably high level, with long-term unemployment now a prominent feature of the labour market. This high unemployment rate is the unfortunate legacy of the crisis in Ireland, and underlines the importance of the Action Plan for Jobs 2013 launched last month by the Taoiseach, the Tánaiste and the Minister for Jobs, Enterprise and Innovation.
My Department’s latest economic forecasts were set out in December 2012 as part of the Budget. For this year, real GDP growth of 1.5 per cent is projected. While exports are expected to remain the key driver of the recovery, a gradual pick-up in domestic demand is projected over the medium term, as the recovery broadens out and spills over to the labour market in a more sustained way from the second half of 2013 onwards. Growth is expected to accelerate to 2½ per cent in 2014 and close to 3 per cent in 2015. My Department will issue revised forecasts in the Stability Programme Update, which will be published next month.
