Well, the forecasts get worse and worse. But I think that Dermot O’Leary from Goodbody has it pretty much right:
Sharply declining output in the construction sector, coupled with a consumer in retreat, is expected to contribute to a fall in output in the Irish economy in 2008 for the first time since 1983. We now expect a contraction of -2.2% in GDP in 2008, down from our previous estimate of +1.1% (GNP forecast down from 0.8% to -2.1%). Falling employment and a further contraction in construction, though, will mean that a recovery in output overall is now not likely until 2010.
The real question I’m wondering is what are the assumptions behind this. The Lovely Girl was certainly overegging the pudding when she defended the Government against the straw man that FG and other critics don’t recognise the existence of *any* international external factors affecting Ireland’s economy. Because the two biggest external factors really do matter:
1. How much inflation do we import? (Energy and world food prices)
2. How much unemployment do we export? (Polish/E European construction workers - do they go or do they stay)
Assumptions based on answers to these questions will have a lot to do with differences between forecasts. So look for hints to see where an economist is coming from.
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