Government 2014 growth projections scoffed by ratings agency S&P

23rd December 2013 | News

Global ratings agency, S&P poured cold water on the Government’s growth projections for 2014 last week, believing that Ireland’s GDP would rise by 1.5 per cent, not the 2 per cent forecast by the Department of Finance.
This forecast is also at odds with the rather bullish assessment of Ireland’s growth prospects for the next 12 months by the Economic and Social Research Institute (ESRI) of 2.7 per cent; suggesting that some international observers are not quite as optimistic about Ireland’s economic recovery.
Meanwhile the International Monetary Fund (IMF) said recently that the economy would grow 1.7 per cent next year.
However, overall, S&P gave a positive overall assessment of Ireland’s economic prospects for 2014. The global experts predict Ireland will come well within the goal of reducing the budget deficit to less than three per cent of GDP by 2015.
This is despite the IMF recently claiming that cuts of €2bn by the Irish government will not be enough to meet critical EU targets. The Washington-based organisation believes total cuts and tax hikes of €2.4bn are needed by next autumn to bring the deficit below the mark of three per cent of GDP.
S&P also reaffirmed its BBB+/A-2 long and short-term foreign and local currency sovereign credit ratings on Ireland. It believes the country will continue to reduce its general government debt burden via a responsible combination of austerity measures and asset sales.
The agency added it would consider raising the rating on Ireland if growth exceeds the "relatively cautious" projection of gradual recovery to slightly more than two per cent average GDP growth from 2015.
"The outlook remains positive, reflecting our view that there is a more than one-in-three probability that we could raise our long-term ratings on Ireland in the next 18 months," it concluded.