Dáil Éireann Debate, Wednesday - 1 February 2012
73 Deputy Bernard J. Durkan asked the Minister for Finance if he is satisfied that the targets identified in the context of budget 2012 can be reached notwithstanding less-than-anticipated economic growth rates; and if he will make a statement on the matter. [5827/12]
Amharc ar fhreagraThe Budget forecast is for real GDP growth of 1.3 per cent in 2012. This forecast was prepared on the basis of economic information (domestic and international) available up to end-November 2011, and was mid-range at that time. Given the highly uncertain environment, the Budget documentation also pointed to a number of risks to this forecast — some to the downside and some to the upside. This uncertainty has continued into 2012 and is reflected in the wide range of GDP projections for this year, not just for Ireland, but also for the euro area. Indeed, more recent forecasts and revisions — including those of the Troika — reflect heightened concerns about the euro area and the wider global outlook. However, there have also been positive developments, not least of which is the trajectory for ECB interest rates which appears more favourable than when the forecasts were compiled at Budget time. In addition, recent exchange rate movements will be of some benefit to the exporting sector.
In terms of targets, I am assuming that the Deputy is referring to fiscal targets. In this regard, while the Troika has revised down its real GDP growth forecast for this year, it still sees the overall deficit target of 8.6 per cent as achievable. There are of course risks to this, as is always the case with any forecast in any year. In this respect, it is important to highlight that it is the nominal growth rate of GDP (i.e. volume and price changes) which drives tax revenue and affects the various fiscal ratios. It is also crucial to point out that the Exchequer budgetary position at end-2011 was slightly better than anticipated at Budget time.
My Department will continue to monitor the economic and budgetary situation, in particular the monthly Exchequer Statements (the end-January Statement will be published tomorrow), and this will inform official thinking over the coming months. As is the norm, my Department will publish a revised set of economic and budgetary forecasts in the April Stability Programme Update.
