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| Department of Finance, Merrion Street, Dublin |
As part of the reforms of the budgetary process announced by the Minister for Finance in the Budget last December the Department of Finance today published the Pre-Budget Outlook, October 2006, which sets out the outlook for the Irish Economy over the period 2006 – 2008. This updates and provides more information on the economic and fiscal projections presented in the Budget Booklet published on Budget day last December.
The report points out that the outlook for the Irish economy over the period 2006 – 2008 is broadly positive. Based on available data, which point to a continuation of strong economic growth this year, the Department has revised its 2006 growth forecasts upwards. In overall terms, the Department projects that Gross Domestic Product (GDP) will grow by 5¼% and Gross National Product (GNP) will grow by 5¾% in 2006. For the period 2006 to 2008 the Department forecast that both GDP and GNP will expand by 5% per annum.
The projected budgetary position over the period 2006 to 2008, on a pre-Estimates and pre-Budget basis, is for an overall surplus of 1.0% of GDP in 2006 followed by projected surpluses of 0.4% and 0.2% in 2007 and 2008. These figures will change depending on the final Estimates of Expenditure and Budget day decisions.
The Department project that on this basis the Debt ratio would decline from 27½% of GDP in 2005 to 25½% of GDP in 2008. This debt-to-GDP ratio will be maintained at the second lowest in the eurozone.
Employment grew by 89,000 (4.6%) year-on-year in the first half of 2006, and by the second quarter of the year, the level of employment exceeded 2 million for the first time in the history of the State. Unemployment rates remained one of the lowest in Europe. The Department forecast that Employment growth will average 3% per annum for the period 2006 to 2008, with unemployment remaining relatively low over the forecast horizon.
Commenting on the Outlook, the Minister for Finance, Brian Cowen, welcomed the publication as the first step in his reform of the Budget process and the broadly positive outlook for the Irish economy over the period 2006 to 2008. He said “this document will provide a valuable context and framework within which the 2007 Budget decisions can be set. The publication of the Outlook marks a more open and transparent framework against which I will be presenting the Budget to the Dáil in December. It is a major step forward in my plans to modernise the budget process by providing improved and more relevant information to the public and their representatives. I also welcome the very positive outlook for growth in the published projections notwithstanding the real challenges that we face over the next few years.”
“My Department’s economic projections for growth over the forecast period are appropriate to an economy at full employment and achieving its potential rate of growth. There are risks on the international scene of lower growth and variable oil prices but the prudent fiscal policies that this Government has followed give us the flexibility to cope with such risks.”
The Minister further emphasised that he is committed to adhering to the prudent, stability oriented approach to the Budget that has been the cornerstone of the economic success of the country under this Government.
