Economic Recovery Expected By 2011

The Irish economy could return to an average annual economic growth rate of 5% between 2011 and 2015, according to an independent economic group of experts.

However, the Economic and Social Research Institute (ESRI) specified that the growth depends on a quick recovery in the world economy.

Its representative, John Fitgerald added that even if recovery happens the level will not be as good as it was at the boom times.

ESRI also warned that the Irish economy is facing a permanent 10% drop in economic output, despite the predicted recovery.

By the end of next year output is expected to fall back to 2001 levels and the Institute advised carrying out a significant number of domestic actions before the arrival of the economic recovery.

Among these actions, it suggested the resolution of the banking crisis and the introduction of measures to avoid the perpetuation of the unemployment.

Moreover, it said that a reduction of wages and other labour costs are needed to make the Irish economy become more competitive.

ESRI said that other important conditions for the economical recovery include reducing the structural deficit.

It considered that higher taxes will have to become a permanent feature of the economy, in order to address that.

The result of the application of all these measures could permit a rapid economic growth in Ireland during period, by around 5% on average each year.

The Institute said that unemployment could be reduced, from 17% next year to around 7% by 2015.

However, it will not be until the middle of the next decade that the output would return to 2007 levels.

Meanwhile, the Central Statistics Offices has revealed that prices in Ireland are plummeting faster than anywhere in Europe.

The cost of living fell 0.8% last month and by 3.5% in the year to April, the steepest fall in inflation since 1933.

The average mortgage bill is now 39% lower than a year ago. Food prices fell by 1.7% and clothes are down almost 12% during the year.

However, although transport costs increased slightly owing to rises in fuel and motor costs, according to the European HICP measurement, Ireland has the lowest inflation in Europe. Portugal, Luxembourg and Spain are also recording falling prices.

See: 75,000 Repossessions This Year Now Looks Pessimistic

(AC/BMcC)