The report shows that gains in competitiveness and increased exports are driving a modest recovery which should see growth reach 1.2 per cent in 2011, an upward revision from the zero per cent rate projected last May in the OECD’s last Economic Outlook.
The new forecast comes with significant downside risks, however, notably market fears over financial stability in the euro area.
The OECD Survey urges Ireland to persevere on the path of fiscal consolidation established under an EU-IMF stabilisation programme, notably that its budget deficit drop below 3 per cent of GDP by 2015. The OECD projects that the Irish deficit will be 10 per cent of GDP this year before beginning a downward trajectory in the coming years. To meet fiscal consolidation targets, the report recommends spending restraint be focused on public sector efficiency, welfare reform and infrastructure projects. It also suggests broadening the tax base, through a reduction in tax expenditures and introduction of property taxes.
“Provided the economy continues to grow, Ireland should consider reducing the budget deficit faster than required by the programme, to help gain credibility in financial markets”, said Robert Ford, deputy director of the OECD country studies division.
Full report
© OECD
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article