The Irish economy is facing a tough 2011. Back in December, our forecast was for 1.0% y/y growth in real GDP. Since then, others have lowered their forecasts to something similar to ours as they factor in lower domestic consumption and greater headwinds from fiscal austerity than they previously expected (Figure 1). Our initial forecast for 2012 is 2.1% as we expect these headwinds to abate somewhat.
Figure 1: Selected Irish Real GDP Forecasts (% y/y)
Source: National recovery plan, Irish central bank, IMF, European Commission, OECD, ESRI
Domestic and external demand will continue to[...]