Irish Central Bank on economy

The Irish Central Bank has just published its first Quarterly Bulletin of 2005:

The Bulletin reports that the outlook for the Irish economy in 2005 remains positive; the Bank is forecasting GNP growth for 2005 of about 4¾ per cent (GDP 5¼ per cent). However a number of risks remain. External risks include the strength of the euro and the uncertainty surrounding oil prices. Domestically, the high level of house prices and the strong growth in credit still cause concern.

The Bank says that the reasonably strong growth forecast for Ireland in 2005 is based on a favourable outlook for the global economy and moderate growth for the euro area. In addition, domestic demand is expected to drive output this year. However, the increase in residential construction growth is expected to slow, with a shift towards other construction likely.

Employment growth – at about 2½ per cent - was strong in 2004, with significant contributions from the construction and services sectors. The unemployment rate could drop to about 4¼ per cent in 2005, from 4½ per cent in 2004.