As the Deputy implies, recent data indicate a slowing in activity in the US and EU economies. However, the extent of this slowdown is not yet clear and policy-makers are considering a number of measures to support growth. While some commentators are saying that the global economy is headed for recession, this is not the view of the lead international forecasting institutions. Indeed, while the IMF has identified a number of risks to global growth prospects and revised down its outlook for the global economy in September's World Economic Outlook, it still expects world economic output to grow by 4 per cent both this year and in 2012. While Ireland cannot expect to remain immune from a slowdown in the pace of the global recovery, the Quarterly National Accounts (QNA) data recently published by the CSO for the second quarter were encouraging. These showed that GDP in the first half of the year grew by 1.3 per cent on an annual basis. My Department's latest published projection for the year as a whole contained in the April Stability Programme Update was for GDP growth of 0.8 per cent. Although the slowdown in economic activity over the summer months points to a weaker second half to the year, it is still reasonable to assume that overall economic activity in the region of the earlier published Stability Programme Update forecasts remains achievable. My Department is currently reviewing its economic and fiscal forecasts for 2011 and later years in light of the emerging data and revised forecasts will be published later this month in the Pre-Budget Outlook.
The Ecofin Council implementing decision of 7 December 2010 on the granting of financial assistance to Ireland, set out that Ireland's General Government deficit shall not exceed 10.6 per cent of GDP in 2011 and 8.6 per cent in 2012. My Department's most recent forecasts are for a deficit of around 10 per cent of GDP this year, which is within the Programme target. Budgetary consolidation of €3.6 billion is required under the EU-IMF Programme, but I have already stated that if there are downward revisions to our growth projections for next year, a higher adjustment package may be required to ensure we meet the deficit target. As noted already, the Department of Finance will set out its assessment of the likely amount of consolidation required to achieve the deficit target of 8.6 per cent of GDP as per our Programme target.
As has been continually noted, both domestically and internationally, Ireland is making good progress under the terms of the EU-IMF Programme and we are meeting our fiscal targets. This fact has been recognised by the markets, as reflected in the very significant reduction in the yields on Irish Government bonds. It is essential that we continue to deliver on our recovery strategy through reforming our banking system, restoring growth to our economy and returning sustainability to our public finances.