Irish economy to grow by 5% in 2006

BizWorld:

Ireland's GDP is expected to grow at a steady rate of 5pc over the next two years, according to an OECD report published today.

The OECD said in its latest global economic outlook that the expansion will be driven by continued income growth and sustained government spending.

The removal of the Groceries Order was welcomed by the OECD who said that intense competition was needed to counter short-term inflationary pressures and to boost long-term growth.

The OECD report warns that, "with strong activity exerting inflationary pressures, core inflation is projected to creep up over the projection period."

In Europe as a whole, the OECD forecast a 2.9pc growth in 2006 and 2007 following a 2.7pc growth this year.

The report also said that, following a 3.6pc growth this year, the US economy would power ahead at 3.5pc next year and 3.3pc in 2007.

With the ECB expected to raise interest rates later this week, the OECD report recommended that eurozone interest rates should stay static until September or October 2006, as inflation in the 12-nation currency area was well under control.

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