Davy Stockbrokers has downgraded its already bearish forecasts for growth in the Irish economy for this year and next.
In a new report, Davy economist, Mr Robbie Kelleher, said that economic growth, as measured by gross national product, (GNP) will increase by 0.7 of a percentage point this year and by 1.1 per cent in 2003.
It had previously signalled growth of 1.2 per cent this year and 2.7 per cent next year.
This compares to Government forecasts for economic growth of 3 per cent in 2002.
The Central Bank of Ireland has taken a more optimistic view, suggesting that the economy will expand by 3.5 per cent next year.
Mr Kelleher said that while the Irish economy showed promising signs of recovery in the early months of the year, the global economy has slowed appreciably since the summer and early autumn.
He believes that the global slowdown is the main constraint for Ireland's economic growth prospects.
"Inevitably, the consequences of this slowdown have worked their way through to most of the major economic indicators in the Irish economy and we think it likely that GNP growth will come in at around 1 per cent in the current year," according to Mr Kelleher.
He does not believe that this would be a disappointing outturn though, given the extent, depth and length of the global economic correction that has occurred, particularly in the US economy.
"An economy as open as Ireland will do well to manage any significant growth at all, particularly as it has come off a period of such rapid growth during the bulk of the past decade."
He predicts that the Government will have to borrow more than €1 billion to balance its books this year, and €2.5 billion to balance them next year.
Davy has also raised its inflation forecast to 3.7 per cent in 2003 from 3 per cent.
Mr Kelleher predicts that on Budget day, the Minister for Finance, Mr McCreevy, will pay only 25 per cent of the public service pay awards due from the benchmarking process.
He says if these are backdated to the beginning of this year they will cost €500 million.
