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The Central Bank says the pace of decline in economic activity
is moderating, and Ireland will likely experience a modest recovery
during the course of next year, indicating that the worst of the
recession may be over.
In its quarterly bulletin
published today, the Central Bank predicts that following a 3 per cent
decline in GDP last year, a further decline of around 8 per cent is
likely in 2009.
It added that while there is the prospect of
stabilisation followed by a return to modest growth during the course
of next year, GDP for 2010 as a whole is projected to be about 2 ¼ per
cent lower than this year, with a return to modest, sustainable, growth
by 2011.
It said the improvement would be dependent on a gradual improvement in the world economy.
However, the Central Bank said Ireland's recovery from recession will be slower than elsewhere.
It
said Ireland's return to grown is contingent on our main trading
partners’ economic recovery, which should help to support growth in
Irish exports. However, it added that domestic demand is likely to
remain weak until 2011 at the earliest.
"The fallout from the
unwinding of the large domestic imbalances created during the earlier
boom will continue to restrain economic activity and significant
headwinds to recovery remain in place. These are projected to ease only
gradually, and recovery, when it emerges, will at first most likely be
modest. The outlook remains subject to considerable uncertainty," the
bank said.
"The contraction in economic activity since 2007 has
been exceptionally severe. While the initial downturn in activity was
driven by the sharp decline in the construction sector, this has
broadened out into a marked weakening of domestic demand that was
significantly amplified by the impact of global financial market
turbulence, the collapse of world trade and severe recession in all our
main trading partners," it added.
The bank said the trend in key
monthly indicators, along with evidence from sentiment surveys,
suggests that the “most intense phase” of economic contraction occurred
in the fourth quarter of 2008 and the first quarter of 2009.
"While
the economy is continuing to contract, the pace of decline has
moderated from the rapid pace evident between last Autumn and this
Spring," the Central Bank added in the report.
Source: irishconstruction.com
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