Ireland will miss its bailout target of cutting its deficit to 3 per cent of gross domestic product (GDP) by 2015, according to Goodbody Stockbrokers.
The Dublin-based securities firm has cut its 2012 GDP estimate for the country to 0.7 per cent from 1.2 per cent, with domestic demand contracting by 2.6 per cent, it said in a note today.
Growth will improve in 2013, but the process of deleveraging by banks and households will drive a further modest fall in domestic demand in that year, the firm predicted.
It argued that the process of bank deleveraging should be slowed in order to encourage a recovery in the domestic economy, but said this would require further assistance from Europe.
Officials from Ireland’s so-called troika bailout partners in the EU, ECB and the IMF arrive in Dublin today for a two-week review of the country’s bailout targets.
“The broad conclusion must be that we are now moving firmly into the realms of the stressed macro-economic scenario outlined” in Ireland’s bank stress tests in March last year, compared to base-case assumptions, Goodbody said.
Bloomberg
