2012-11-15 19:48:51 - Ireland Business Forecast Report Q1 2013 - a new country guide report on companiesandmarkets.com
Ireland´s economy will post negative growth in 2012 as fiscal austerity, household deleveraging and a recession in Europe weigh on activity.
We forecast real GDP to contract by 0.5% in 2012, and grow by just 0.4% in 2013, following a 1.4% expansion in 2011.
The outlook for the Irish economy remains precarious, with a swift recovery from its post-2007 woes unlikely. Since 2007 growth has been driven almost entirely by net exports, but key pharmaceutical exports are set to suffer from the ´patent cliff´ over the next few years, and tepid domestic demand is unlikely to pick up the slack.
Ireland´s affirmation of the eurozone fiscal pact provides the Irish government with some leverage for negotiation with its eurozone creditors over Ireland´s more-than-likely
second bailout. Although the government remains committed to its fiscal austerity programme we believe that Ireland will miss its current fiscal deficit and debt targets on account of the less favourable external environment and political wrangling among the governing coalition.
Key Risk To Outlook
There are signs that house prices have bottomed out, and given how hard fixed investment has suffered over recent years there is potential for a rebound in investment in 2013. If this were to play out it would place upside risks to our below-consensus real GDP growth forecast, although for now we believe the chances of a significant recovery in fixed capital formation are limited by access to financing a still weak consumption outlook.
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