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Ireland's Central bank warns recession will "persist" in 2009
Oct 3, 2008, 14:11 GMT
Dublin - The Central Bank in Dublin forecast Friday that Ireland's economy would contract by 0.8 per cent this year and that the recession would 'persist' in 2009.
'After more than a decade of very strong growth, the Irish economy has entered a difficult period of slowdown and adjustment,' the bank said in a statement.
Ireland's gross domestic product grew by 6 per cent in 2007.
The bank said the recession was the result of 'a rebalancing of the economy' after a long period of growth and increasing reliance on the housing market.
Some 79,000 houses were completed in Ireland in 2007, but that will fall dramatically to 47,000 this year and only 25,000 in 2009. House prices are now falling at 10 per cent a year and are currently 13 per cent below their peak in 2007, the bank said.
The global financial crisis, rising costs for food and energy and the slowing of the economies of Ireland's major trading partners had 'significantly amplified' the slowdown in growth.
'The downturn in activity is set to persist next year, with growth set to contract at around the same pace as in 2008,' the statement said.
The bank welcomed the Irish government's two-year 400-billion-euro (560-billion-dollar) guarantee of all deposits in irish-owned banks which was signed into law by President Mary McAleese on Thursday.
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