RECESSION 'SET TO END IN 2011' Hope as the economy to grow 2.5%.Byline: PAT FLANAGAN
THE end of the recession is in sight with the economy set to grow by nearly 2.5% in 2011, a leading stockbroking firm predicted yesterday. A report by Goodbody Stockbrokers claimed the financial outlook is not as bleak as it previously forecast but the economy is still set to shrink by 1.1% next year.
It had earlier warned it would contract by 3.7% next year and only grow by 1.2% the following year.
Chief economist Dermot O'Leary said he is now more confident of a speedy recovery in economic growth because of an improvement in exports.
But he also warned Ireland has still alarming levels of private debt.
He added: "Risks remain but the outlook has brightened considerably. We believe private sector debt levels will increase to 224% of GDP GDP (guanosine diphosphate): see guanine. in 2009, and are unlikely to fall below 200%.
"Given that Ireland is one of the most indebted economies in the developed world, we have benefited most from the collapse in interest rates, which we have quantified at around 5% of GNP GNP
See: Gross National Product .
"However, this benefit will not be repeated and will act as a drag on businesses and consumers going into 2011 in particular as the impact of interest rate rises is felt."
Mr O'Leary maintained high private sector debt is of greater worry for the economy than public sector debt.
Mr O'Leary added household debt levels have peaked at 175% of disposable income disposable income
Portion of an individual's income over which the recipient has complete discretion. To assess disposable income, it is necessary to determine total income, including not only wages and salaries, interest and dividend payments, and business profits, but also , but added Irish households are better able to live with higher debt levels due to the younger population and low interest rates.
He also claimed: "The Budget deficit is likely to remain high in the coming years and we do not believe the Government will reach its target of hitting the 3% of GDP deficit by 2013."
While he said the Irish economy still faces many pitfalls he said the outlook is brighter.
Meanwhile, the EU Commission revealed yesterday the long-term gap in the country's public finances stands at around EUR EUR
In currencies, this is the abbreviation for the Euro.
The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 27billion a year.
The figure for this year is five times the estimate in the last such report in 2006 and means the Government will have to find around EUR14billion a year in higher taxes or spending cuts to fix the present budgetary crisis.
GDP, Gross Domestic Product, is the value of the goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. in Ireland while GNP - Gross National Product - is the value of what's produced by Irish people and firms here and abroad.