Ireland’s economy will grow this year at about half the pace forecast by the government in December, Finance Minister Michael Noonan said.
Irish growth may be about 0.75 percent this year, Noonan said in an interview with Dublin-based broadcaster RTE today, down from a December estimate of 1.3 percent. In its sixth review of Ireland’s bailout program, European and international authorities said that while the country is on track to reach its fiscal deficit target, “considerable challenges” remain.
Irish export demand growth is slowing as the European sovereign debt crisis spreads, while the domestic economy is laden down by debt. The International Monetary Fund, the European Central Bank and the European Commission, Ireland’s so-called troika partners, said today that the economy will probably grow by 0.5 percent in 2012.
“A stronger recovery in 2013 would depend on a rise in trade partner growth together with some stabilization of domestic demand,” said Craig Beaumont, the IMF’s Mission Head to Ireland, in a telephone call with reporters.
Ireland swung into a recession in the final quarter of last year as the legacy of the country’s property and fiscal austerity measures continued to weigh on domestic demand. Irish home prices were unchanged in March from the previous month, the first time since August 2010 that values didn’t decline, the country’s statistics office said today.
The government is likely to meet the 2012 goal of cutting its deficit to 8.6 percent of gross domestic product from an estimated 9.4 percent last year, the troika said in its statement today.
Ireland’s October 2020 bonds, regarded as the benchmark, yielded 6.83 percent, down from 9.1 percent at the start of December.
Ireland’s planned market return following its acceptance of a bailout in 2010 will be “gradual” and may start this “summer,” Noonan told reporters in Dublin today. The National Treasury Management Agency Chief Executive Officer John Corrigan said on Jan. 13 the agency is looking at the possibility of selling short-term securities in June or July.
As the government prepares to reenter credit markets, it is seeking European help to refinance cost of bailing out the former Anglo Irish Bank Corp. A paper by the troika on the banking debt probably won’t be ready before voters go to the polls on Europe’s new fiscal treaty, Noonan said, adding the “Spanish situation” may affect the timing of the report.