The forecast growth rate for the Irish economy this year has been sharply cut by the European Commission.
In a draft of its spring forecast, the Commission cut its forecast for Irish GDP to 3.3 per cent, down from 4.2 per cent.
It has also cut its forecast for 2004 to 3.2 per cent from 5.2 per cent. The spring outlook, due to be officially released tomorrow, is also likely to warn that the risks to growth across Europe remain, particularly if the war in Iraq is prolonged.
The 3.3 per cent growth forecast for the State is close to a recent growth forecast from the Central Bank of 3.25 per cent.
The growth forecast for the 12-nation eurozone region has been cut by the European Commission to 1 per cent from 1.8 per cent. The growth figure for 2004 to was also cut from 2.2 per cent from 2.6 per cent.
The German economy, the zone's biggest, is expected to grow by just 0.4 per cent in 2003 against the commission's autumn forecast of 1.4 per cent.
On inflation, the commission left its 2003 eurozone forecast unchanged at 2 per cent but cut its 2004 projection slightly to 1.7 per cent from 1.8 per cent. Irish inflation is running more than double this rate at 5.1 per cent.
The European Commission also said that Italy will next year become the fourth country to breach the EU stability and growth pact's deficit limit of 3 per cent of GDP and warned that Portugal, which exceeded the limit last year, will remain above the threshold during 2003 and 2004.
AFP