Quarterly Economic Commentary, Winter 2012

The latest ESRI Quarterly Economic Commentary concludes that improvement in GDP growth this year, 2013, looks set to be more subdued than previously thought as global economic activity is weaker. Growth in the Irish economy continues to be driven by the external sector. The positive growth of 2012 is expected to continue into 2013 and 2014. Growth as measured by GDP is estimated at 1.3 per cent for 2012 and is forecast at 1.3 per cent and 2.3 per cent in 2013 and 2014 respectively. Domestic demand remains very weak and is due to contract again in 2013 and 2014, though the pace of contraction is easing. The final outturn for growth over the forecast period is heavily conditional on the performance of the European economy, which at present is very weak. The public finance position improved in 2012, with the agreed targets being comfortably met. In 2013 the targets are more challenging, mainly on the expenditure side. The Croke Park extension talks are opening up important possibilities to help the process of reducing expenditure. The full effects of any reductions achieved are more likely to be felt in 2014. Nevertheless, in broad terms we think the fiscal targets can be met in both 2013 and 2014. The rate of unemployment remains above 14 per cent. It is forecast to decline from 14.9 per cent in 2012 to 14.6 per cent in 2013 and 14.3 per cent in 2014. However, the main driving force behind this reduction is ongoing net emigration.

Note to Editors: 1. The Quarterly Economic Commentary, Winter 2012, by David Duffy, Joseph Durkan, Kevin Timoney and Eddie Casey (ESRI), will be published online on the ESRI website on Thursday 31 January 2013. 2. This Quarterly Economic Commentary (QEC) includes the following Research Notes:

• "Tax and Taxable Capacity: Ireland in Comparative Perspective " – Tim Callan and Michael Savage
• "Comparing Public and Private Sector Pay in Ireland: Size Matters" – Elish Kelly, Seamus McGuinness and Philip O'Connell
• "The Regional Dimension of the Unemployment Crisis" – Edgar Morgenroth
• "Trends in Consumption since the Crisis" – Brian O'Connell, Conor O'Toole and Nuša Žnuderl
• "Revisions to Population, Migration and the Labour Force, 2007-2011" – Kevin Timoney

and the following Research Bulletin articles:

• • "The Macro-Economic Effects of Raising Revenue through Different Taxes", Thomas Conefrey (Central Bank of Ireland), John FitzGerald, Laura Malaguzzi Valeri and Richard S. J. Tol (University of Sussex).
  • "Telecommunications Consumers: A Behavioural Economic Analysis", Pete Lunn.
  • Maternal Smoking During Pregnancy- A Burning Issue, Cathal McCrory (TCD), Richard Layte (published online 12/11/2012).
  • "The Impact of Foreign Direct Investment to China on Foreign Direct Investment to Other Countries", Laura Resmini (Università di Milan Bicocca) and Iulia Siedschlag
  • The Research Notes and Research Bulletin articles will be available to download from our website on Thursday 31 January. Comments and queries should be sent directly to the authors of the papers. Bulletin articles are designed to be easily accessible to a wide readership. A reference or references to the full publication is included at the end of each Bulletin article, as is the contact email address of the authors. Copies will also be available at the QEC media briefing.

3. Members of the media are invited to attend the media briefing to be held on Wednesday 30 January at 10.30 am at The ESRI, Whitaker Square, Sir John Rogerson's Quay, Dublin 2 Copies of the QEC and the papers will be available at the briefing.