Quarterly Economic Commentary, Autumn 2012

The Irish economy can be described as “bouncing along the bottom”, according to the ESRI. The latest ESRI Quarterly Economic Commentary concludes that a further slight fall in activity will probably be recorded for 2012, with only low growth likely in 2013. Growth in GNP, which is a better measure of Ireland's economic performance than GDP, is expected to fall marginally in 2012, down 0.2 per cent. GDP, which is used in measuring the fiscal targets by the Troika, is expected to increase by 1.8 per cent. Next year, GNP growth is predicted be positive at 0.7 per cent, reflecting stronger exports of goods and services and some pick up in investment. In GDP terms the growth will be 2.1 per cent. The weakness of the domestic economy means that unemployment will remain high. At the same time the balance of payments surplus is set to increase, also reflecting the continued contraction of domestic demand. The public finances have improved in the year to date, but the scale of the adjustment required is still substantial. Even if there were no government debt and hence no interest payments, the budget deficit would still be large – day-to-day expenditure continues to outstrip revenue. The situation on the expenditure side is particularly difficult, as some of the main expenditure areas, such as health and social welfare, are demand driven. The precise cuts in public expenditure to be implemented reflect judgement about the relative merits of different forms of expenditure. Whether action is based on across-the-board decisions, or more specifically targeted, significant cuts in public expenditure need to be implemented to return the public finances to a stable pattern.

Note to Editors: 1. The Quarterly Economic Commentary, Autumn 2012, by David Duffy, Joseph Durkan and Eddie Casey (ESRI), will be published online on the ESRI website on Friday 21 September. The embargo is 00:01 a.m. Friday 21 September. 2. This Quarterly Economic Commentary (QEC) includes the following Research Note:

• "Trends in Irish Exports", David Duffy and Eddie Casey (ESRI)
• This QEC also includes the following Special Article:
• "Measuring Fiscal Stance”, by Ide Kearney (ESRI)
• and the following Research Bulletin article:
• “What do we know about special educational needs? Evidence from Growing Up in Ireland”, by Joanne Banks and Selina McCoy (ESRI).

The Research Notes, Special Article and Research Bulletin article will be available to download from our website on Friday 21 September. Comments and queries should be sent directly to the authors of the papers. (Note - 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).