Ireland's nominal gross domestic product may grow between 4 per cent to 6 per cent next year, Minister for Finance Michael Noonan said.

The Government predicts that gross domestic product will expand about 2 per cent next year, or 4 per cent including inflation, Mr Noonan told journalists today in Paris. Nominal growth could increase to as much as 6 per cent if the world economy expands more quickly than expected, he added.

Ireland's medium-term outlook is improving mainly because the Government has created an "internal devaluation" of 16 per cent since the onset of Europe's financial crisis by pushing down labour costs, according to Mr Noonan. With the European Central Bank now adding liquidity and turmoil in the European debt markets fading, growth prospects may improve in coming months, he added.

"We have become so competitive in this period of austerity that if the world economy picks up, then Ireland can take off like a rocket," he said. "We may have very strong growth rates in the next couple of years."

This year may be more difficult. Mr Noonan said earlier this week that he expects to cut the 2021 growth forecast of 1.3 per cent, though the Government will still meet its budget deficit target of 8.6 per cent of GDP. "Deficit reduction is on target," he said today. "Ireland has consistently achieved or exceeded all its targets."

Mr Noonan said he also hopes to secure a deal by the end of the year with the country's bailout partners to restructure about €30 billion of so-called promissory notes used by the State to rescue Anglo Irish Bank Corp, renamed Irish Bank Resolution Corporation last year.

While the Government estimates the notes will cost about €17 billion in interest before they are repaid in full, it is paying this to the state-owned bank. IBRC, in turn, uses the notes as collateral to borrow from the Central Bank.

Bloomberg