The Government has lowered its expectations for economic activity and employment in 2012 in its first economic forecast since December’s budget.
Despite this, most of its other short terms targets are expected to be met. These include metrics that the government is obliged to meet under the terms of its bailout, including the size of its budget deficit.
“Based on these economic growth forecasts and having taken on board the first quarter Exchequer data, my Department still expects that the General Government deficit target of 8.6 per cent of GDP for 2012 is on track to be achieved” the Minister for Finance, Michael Noonan, said today.
The Government now expects gross domestic product (GDP) to expand for the second successive year and at an identical rate to last year.
Without additional measures in the coming years, unemployment will fall only very gradually the report forecasts. In 2015, just under 12 per cent of the workforce will be jobless. The current rate is just over 14 per cent.
The forecasts are subject to very considerable risk, most of which is to the “downside”.
“The degree of uncertainty and margins of error surrounding projections for Ireland and the global economy are particularly high at this time” the report said.
Domestic risks highlighted in the document are households maintaining high savings to bolster their broader financial positions and an ill-functioning banking system.
Internationally, a reigniting of the euro financial/debt crisis and a sudden increase in oil prices are given priority in the report.