WEAKER ECONOMIC conditions in Europe will see Irish export growth fall short of previous expectations, according to the latest National Irish Bank FDI quarterly report.

The report suggests exports will grow by 4.5 per cent next year, down from an estimate of 5.5 per cent, but said it expected a continued increase in employment from export-led firms next year.

“European markets represent 60 per cent of Irish exports, although they are expected to grow only 0.3 per cent in 2012, said the report’s author and NIB chief economist Ronnie O’Toole.

He added: “2012 will be a more difficult year in terms of exports. However, the improvements in competitiveness over recent years coupled with Ireland’s relatively ‘recession proof’ export mix should still allow for a reasonable level of export growth next year.”

Last month, the Economic and Social Research Institute slashed its forecasts for next year because of fears for growth, while the Investec Ireland Export Analysis Report (I-EAR) also warned that euro zone troubles would negatively affect exports

In its revised forecast, the institute predicted a rate of gross domestic product (GDP) growth of less than 1 per cent for 2012.

The NIB report also forecast a dip in foreign direct investment (FDI) flows. Citing figures from Unctad which suggest flows have weakened globally in the third quarter, Dr O’Toole said. “The sign of weakness in global FDI is being driven by the weakness in Europe, and this weakness could extend well into 2012 and 2013.”

“The indications for FDI into Ireland are still quite positive, though Ireland is likely to be affected by any slowdown in FDI.”

IDA Ireland has announced 79 projects so far in 2011, more than the total for 2010 and an increase of about 50 per cent on projects in 2008 and 2009. Dr O’Toole said continued export growth and weak domestic demand are likely to see the current-account surplus grow further this year and next.

He said while public sector borrowing remains high, this is more than offset by the “massive scale of deleveraging by private businesses and households”.