IBEC, the group that represents Irish business, today said that the economy will return to growth in 2011 despite the greater than anticipated scale of the fiscal adjustments needed over the coming four years.Commenting on the release of IBEC's latest Quarterly Economic Trends Chief Economist Fergal O'Brien said: "Although we have pared back our forecasts somewhat to reflect the impact of a series of more difficult than expected Budgets, we still see the economy growing by over 2% in 2011. The additional fiscal consolidation needed over the next four years is about 5% of GDP and this is likely to have a growth dampening impact of about 1.5% to 2.5% over the period, depending on the precise nature of how consolidation is delivered.
"The Irish economy has actually performed better than anticipated in 2010, and the export sector, in particular, has fared strongly. Some of our important trading partners such as Germany, have experienced a strong economic recovery and this, coupled with a significant restoration of competitiveness in Ireland, has boosted export opportunities for business. Despite some slowing in the global economic recovery, exports will remain the main source of economic growth for Ireland over the coming years.
"The long-term economic interests of the country are best served by setting out a credible four-year plan to reduce the budget deficit. The framework must balance the need to demonstrate immediate progress in reducing the size of the deficit and sustaining growth and employment recovery in the economy. The over-riding priority is that we preserve the country's credit worthiness and retain control over our economic affairs."
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