Taoiseach stands by growth forecasts

ECONOMIC FORECASTS by the Department of Finance have been defended by the Taoiseach against claims the department was “puffing” growth projections.

Enda Kenny said in the Dáil “we believe the targets we have set out will be achieved in 2012 and the Minister for Finance has been consistent on that issue”.

He was responding to Independent TD Shane Ross who claimed the Government’s 1.3 per cent growth forecast was “disturbing” and “way out of line with the projections provided by all the independent commentators”.

Claiming that the Department of Finance had a “long and slightly unwelcome tradition” of “puffing” economic prospects, he said that he had to ask “whether these guys are number-crunching on crack at the moment”.

Davy Stockbrokers had reduced its projected growth forecast from 1.7 per cent to 0.4 per cent while Goodbody’s had cut its forecast from 1.2 per cent to 0.7 per cent, he said.

Before the budget the Economic and Social Research Institute had cut its forecast to 0.9 per cent.

Mr Ross asked what was the department doing “producing and sticking to figures which no independent commentators agree with and which the budget is now based on”.

The Taoiseach said there wasn’t an economist in Europe “who can give a definitive verdict on the growth rate for any country because of global volatility and the fact that changes can occur instantly”.

Mr Kenny said it was very difficult given all the facts including volatility and uncertainty in Europe and worldwide, “to give a precise definition of what growth rate will be achieved at the end of 2012”.

However, he told the Independent TD the growth rate set out by the department “is an average, medium-term rate which we expect to be able to meet”.

Mr Ross asked if the Taoiseach anticipated introducing “new, sudden and unexpected austerity measures” if the department was forced to revise its figure and said the Government’s primary focus was reducing the deficit.

Mr Ross referred to claims by Goodbody’s that “we will no longer be able to meet our deficit target of 3 per cent of GDP in 2015”, not through the Government’s fault but because of a European recession.

The Taoiseach rejected the stockbroker’s claim. “I do not agree with Goodbody’s assertion. We stand by the figure we have set out.”

He said the discussions taking place about the “fiscal circumstances of the country are continuing with some intensity”.