Ireland's economy will grow by 3.7 per cent in 2004 and by 4.6 per cent next year, according to the European Commission's Spring Economic Forecasts.
Predicting a broad-based economic recovery in the State, the Commission suggested growth would soon be close to the rate commonly thought to be sustainable in the medium term, of up to 5 per cent.
"Growth in real GNI terms seems to have been much more buoyant in 2003 than in real GDP terms, on account of a decline in net factor outflows. This is exactly the opposite of the pattern observed in 2002, when real GDP growth pointed to a remarkable expansion, (concentrated in the chemicals sector) in spite of the worldwide slowdown," the report said.
Inflation is forecast to fall from 4 per cent last year to 2.1 per cent in 2004, bringing Irish inflation close to the euro zone's average. The Commission is confident the Government's budget deficit will remain below 1 per cent this year, rising slightly in 2005.
In a separate report on employment strategy, the Commission says Ireland has made "impressive progress" in terms of employment and productivity performances since 1997.
But the report says the Government should do more to increase the supply and affordability of childcare facilities and take "urgent action" to tackle the causes of the pay gap between men and women.
"Female participation in the labour force has improved but there is still a significant gap between employment rates for women and men, as well as a high gender pay gap.
"Labour shortages remain a problem, although they are eased by increased immigration," it said.
