ESRI sees 5% GNP rise and jobs growth

THE Republic will comfortably meet entry criteria for the single currency, with real GNP rising by about 5 per cent this year…

THE Republic will comfortably meet entry criteria for the single currency, with real GNP rising by about 5 per cent this year, according to the latest commentary from the Economic and Social Research Institute.

In its quarterly economic commentary, the ESRI, says that an increase of 5.75 per cent in real GNP in 1996, despite weak performances by other European economies, underscores the basic strength of the Irish economy.

"The Maastricht criteria for inflation, government borrowing and reducing the debt GNP ratio all appear likely to be securely met in 1997," the report says.

Further vigorous growth in employment this year will drive the live register rate down to 11 per cent of the workforce, it predicts.

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The report points out that if its forecasts are correct, two years of real GNP growth in excess of 7 per cent will be followed by two years of growth of at least 5 per cent, all while maintaining a low rate of inflation.

"Such a performance is so out standing in a European context that questions are increasingly" being asked, both in Ireland and abroad, as to whether the figures are accurate, and, if they are how has such an outcome been possible," the report says. But while no statistics can ever be viewed as definitive, the ESRI says many indicators, gathered independently, all point in the same direction.

"The causes of the sustained, rapid growth are complex, and include the successful attraction of direct foreign investment in fast growing industries through the favourable corporate tax regime, the professional targeting of relevant companies by State development agencies and the availability of a suitably qualified labour force," the ESRI says.

The easing of fiscal and monetary constraints on domestic demand as the public finances have improved, a growing national self confidence in economic as well as other spheres of activity and a general consensus on economic strategy have driven the performance, the report says.