Boosting competition in the electricity and gas markets in Ireland is becoming a matter of urgency, the Organisation for Economic Cooperation and Development (OECD) has warned.
In an economic outlook published today, the OECD said the Irish economy is growing rapidly, propelled by strong household spending.
It projects "robust" expansion of the economy but with a mild slowdown in growth from 5 per cent next year to 4.5 per cent in 2008, as the boost that "temporary factors" are giving to demand fades.
OECD
The think-tank predicts that inflation will remain above the euro area average and says fiscal and regulatory policy should focus on keeping inflation in check.
The OECD also warns that the budget should prioritise spending items that alleviate bottlenecks in the economy, such as investment in human and physical capital, and that it should refrain from fuelling consumption.
"Boosting competition in network industries, especially in the electricity and natural gas sectors, is becoming a matter of urgency as these sectors contribute disproportionately to inflation," the report states.
The OECD Economic Outlookis published twice a year and analyses major trends and economic policies in its 30 member companies. The current edition analyses major trends that will mark 2007 and 2008.
It says that rather than a major slowdown, the world economy may be facing a "rebalancing of growth" across OECD regions.
"Indeed, recent developments point to an unwinding of cyclical differences, with activity having slowed in the United States and Japan, and gathered speed in Europe," the summary states.