Bank of Ireland has revised downwards its expectation for economic growth for 2010, estimating that GDP will rise by 0.5 per cent, as opposed to the 1 per cent previously forecast by the bank.
The bank also revised down its 2011 GDP forecast to 2.5 per cent, marginally below the current consensus.
In its quarterly economic outlook, Bank of Ireland said the contraction in GDP recorded in the second quarter was a "surprise", given the strength of retail sales and other monthly indicators.
However, the bank says that the trade pattern evident earlier in the year may have resumed again in the third quarter, as merchandise exports rose to a 9-year high in the month of July.
"We still expect the external sector to drive Irish GDP growth into positive territory in 2010" it states.
The report, which is authored by Dan McLaughlin, predicts that consumption may fall by 1 per cent his year, following a 9 per cent decline in 2009.
It says the pace of job losses has slowed of late and the unemployment rate may “be at or near a cyclical peak”. If this is the case, some reduction in the household savings ratio in 2011 may take place, leading to a modest rise in consumer spending, it says.
