Denis Foley
Ceist:57 Mr. Foley asked the Minister for Finance his views on the recent IBEC report which concludes that the economy may be facing a slowdown; and if he will make a statement on the matter. [11592/96]
Written Answers. - Economic Growth.
The Irish Business and Employers Confederation — IBEC — publication Economic Trends—Quarterly Review, dated May 1996, contains estimates of growth for 1995 and forecasts for 1996 and 1997 as follows: GDP: 1995, +9 per cent; 1996, +6.3 per cent; 1997, +4.5 per cent.
With regard to the estimated 1995 outturn, the text states that "this is really a massive increase that can hardly be maintained over the medium-term". It also states that "looking further out to 1997, our own cycle of growth is likely to decelerate from the recent boom and we expect growth to fall to nearer the long-term trend of around 4 per cent."
The broad picture presented by IBEC, of exceptionally strong growth last year slowing towards a more sustainable rate of growth this year, was already well known. It was outlined in my Department's post-budget macroeconomic forecast, contained in theEconomic Background to the Budget, published on budget day. This showed GDP growth slowing from an estimated 7.75 per cent in 1995 to a projected 5.75 per cent this year.
It is clear that the performance of the Irish economy in recent years has been outstanding — GDP growth now estimated to have been about 8 per cent in 1995 followed growth of 6.7 per cent in 1994. During this time, Ireland has been the fastest growing economy not just in the EU but also in the wider OECD area. The economy will again be the fastest growing in the OECD area in 1996 when GDP growth is projected by my Department to be around 5.75 per cent.
By way of comparison, it is worth noting that the European Commission's spring economic forecasts, published recently, estimated that growth in the EU as a whole was 2.5 per cent in 1995, and forecast growth of 1.5 per cent in 1996 and 2.5 per cent in 1997. In this context, a slowdown in our rate of economic growth, as projected by IBEC, from 9 per cent last year, to 6.3 per cent this year and to a rate of 4.5 per cent next year can be considered to be more than satisfactory.
Our economic performance reflects the success of the fiscal, monetary and incomes policies now in place. The benefits are seen in historically low interest rates — which support growth, strong increases in employment — nearly 10 per cent between 1994 and 1996, low inflation, improved standards of living and continued improvements in the public finances.