Belfast Telegraph

Davy slashes Republic's growth forecast to 1.1%

Davy Stockbrokers has cut its forecast for the Irish economy because of the risk of a more severe global slowdown and poor consumer sentiment at home.

Davy says GDP will grow by just 1.1% in 2011, down from its earlier forecast of 1.6%.

It reduced next year's forecast to 1.7% from 2.4%.

Growth is split between the "buoyant'' export sector and "stagnating'' domestic demand.

Davy said that economic indicators in Ireland's main trading partners have deteriorated since the last forecast.

One of the reasons for the cut is the weaker demand for exports.

It said that while a severe global slowdown would be unwelcome for Ireland, its exports are very specialised and in many niche sectors such as computer services and pharmaceuticals.

Davy also said that consumers have increased their level of saving and reduced their spending levels due to cuts in people's income.

The stockbrokers also said that a very slow recovery in employment growth means there is very little improvement in the unemployment rate.

It predicts the rate will fall to 13.9% in 2010 from 14.3% this year.