Minister for Finance Brian Lenihan today said he did not envisage an upturn in the economy until the second half of 2011 and warned there were still "significant challenges" ahead.
Speaking at the Department this morning at the launch the OECD’s latest Economic Survey of Ireland, Mr Lenihan said there were indications that "the worst phase of economic contraction may be behind us".
"However, in a continuation of the recession which commenced in 2008, Ireland’s GDP is forecast to contract by more than 7 per cent this year," he said.
The OECD report forecast Ireland's gross domestic product (GDP) may shrink 7.5 per cent this year and 2.4 pe rcent in 2010. It also predicted a budget deficit of 12.2 per cent of GDP for this year and 11.3 per cent next year.
"From a global economic perspective there have also been some early signs of optimism in key regions. I note that the US economy returned to growth in the third quarter. However, we should not be complacent about the significant challenges we face, not least because we do not expect any upturn in the Irish economy until the second half of next year, with the economy not expected to move out of recession until 2011," Mr Lenihan said.
The most important short-term measures being implemented by the Government include stabilising the public finances and restoring confidence in our banking system," the Minister said.
According to a spokesman at the Department of Finance, the Minister was expecting growth to return during the second half of 2010 but was referring to full-year of growth for 2011 in his remarks.
Yesterday, the Taoiseach said the Government hoped to see economic growth return next year, even if the first full year of growth would be in 2011.