Domestic demand is back: ESRI

An optimistic assessment from the Economic and Social Research Institute (ESRI) has stated that Ireland’s economy has “turned the corner” due to growing domestic demand. The ESRI’s winter commentary predicts that demand sourced from within the State grew by 0.9 per cent in 2013, the first rise since 2007.

This mild recovery is supported by continued growth in exports, which is likely to increase gross national product (GNP) by 2 per cent in 2013. If the EU economy returns to growth, GNP growth could reach 2.7 per cent in 2014.

Commenting on the debt-to-GDP ratio, co-author John FitzGerald said: “There is a reasonable chance we’ll be under 3 per cent in 2015 even with a neutral budget next year.”

The ESRI cites the labour market as the most useful indicator for the Irish economy. Lower unemployment prompted the institute to predict 2.5 per cent growth in employment over 2013, with more graduates in the workforce increasing its productivity.

In a research note accompanying the paper, FitzGerald explains that the 2009-2014 budgets have reduced the general government deficit by around eight percentage points of GDP. He forecast a deficit of 4.4 per cent of GDP this year.