The economy will grow by 1.6 per cent in 2013, according to the Irish Quarterly Economic Outlook published by Merrion Stockbrokers yesterday.

Growth in gross domestic product is expected to be 1 per cent for 2012, with increases of 1.6 and 2.8 per cent recorded in 2013 and 2014 respectively.

Merrion believes that the Government’s effort to reduce unemployment could be a “slow process”. The report cites emigration and a contraction in the construction industry as the main reasons behind a weak labour market. With unemployment forecasted to be 14.8 per cent in 2012, Merrion states that this could fall to 14.3 per cent this year and to 13.5 per cent in 2014.

Meanwhile the report predicts that the average rate of inflation may fall to 1.4 per cent this year from an expected rate of 1.7 per cent in 2012. However, inflation may rise by 2 per cent in 2014 due to increases in global energy prices, the report states. Merrion says that the availability of credit could hamper the recovery process.