28/05/2010

OECD Welcomes Ireland's Cuts

An international economics group representing the world's richest 31 countries has welcomed Ireland's devastating cuts and predicted a slight return to growth next year.

The Organisation for Economic Co-operation and Development, whose members include the US, UK, Australia, France and Germany among others has claimed Ireland's huge spending slashes will see a moderate economic improvement.

The praise from the OECD echoes that of many economic think tanks and business interest groups who had called for the cuts to wages and Government spending cuts, as well as the crippling bank bailouts.

Fianna Fáil TD Niall Collins today welcomed the OECD’s assessment that Ireland was “close to a turning point” and predicted that the economy here will grow by 3% next year.

Responding to the report Deputy Collins said, “This is further proof that the tough decisions taken by the Government over the past 18 months have been the right ones. Like the recent forecasts from the Central Bank, the ESRI and the EU, today’s report shows that we are firmly on the road to recovery.”

However, many independent economic commentators are not so sure recovery is that certain and that the buoyed 3% growth prediction will be a short term spur.

The OECD forecast suggested gross domestic product would decline by 0.7% this year, one-tenth the rate in 2009, before expanding by some 3% in 2011. While the projected contraction for 2010 is more modest than the 0.9% forecast by EU economics commissioner Olli Rehn, the 2011 growth forecast is the same as Mr Rehn’s.

The organisation adds that a decline in the labour force, driven by falling participation and outward migration, is likely to continue for some time.

(DW/BMcC)

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