2013 IS SET to be the “turning point” for the fate of Ireland’s domestic economy, as households begin to share the optimism held by outside investors, the country’s employers’ union has said.
IBEC’s quarterly economic outlook, published this morning, predicts that an economic recovery will gain momentum this year, as households begin to feel more confident about their outlook and therefore begin to increase their general spending.
Confidence would also be improved by a deal on restructuring Ireland’s debts under the promissory note regime, which could help to cut down on the government’s overall spending bill and allow it to invest in other areas.
The body expects final figures for 2012 to show economic growth of 1.2 per cent – three times the growth of 0.4 per cent outlined in the most recent leaked European Commission reports on Ireland’s bailout programme.
This would make Ireland the second fastest-growing economy in the eurozone for the year, behind only Slovakia – and would then lead to growth of 1.8 per cent in 2013, ahead of the 1.1 per cent expected by Brussels.
The employers’ group also believes that private sector employment will begin to grow this year, ending successive years of decline, while unemployment will stabilise – though it will “remain high for some time”, the group concedes.
“The economy performed better than many predicted last year,” said IBEC chief economist Fergal O’Brien. “Exports had another record year and a number of indicators suggest the domestic economy has stabilised and is poised to recover.
“Although many Irish households continue to grapple with debt and unemployment, there is growing evidence that 2013 could be a turning point for the domestic economy,” he added.
Surging international investment in the sovereign, banks and utilities demonstrates that those outside of Ireland have growing confidence in our recovery.
When Irish households start to have that same confidence, the recovery will gain greater momentum.
The report also projects an increase of 8 per cent in corporate investment in equipment and machinery, making 2012 the first year in five that the investment sector had not been “a drag on economic growth”.