DUBLIN (AFP) — Ireland's Central Bank forecast Tuesday that the country's recession-hit economy would shrink by 8.3 percent this year as it continues to be hammered by the international financial crisis.
The new forecast for Irish gross domestic product (GDP), contained within the bank's annual report, was worse than the previous estimate of a 6.9-percent contraction that was given in April.
"It now looks as if GDP will contract by 8.3 percent this year," said bank governor John Hurley.
"Next year the level of contraction is likely to be around three percent for the year as a whole with some gradual recovery emerging later in the year but unlikely to take hold until 2011."
He added that Ireland was facing a "very difficult and challenging environment" and that economic recovery was "likely to be gradual."
Ireland sank into recession in the first half of 2008, while its unemployment rate is at 11.9 percent, the highest level since April 1996.
The nation's former "Celtic Tiger" economy was rocked by the global financial crisis and the collapse of a domestic property bubble.
"Given the highly open nature of the Irish economy and the character of economic growth in the years preceding 2007, Ireland was both exposed and vulnerable to the global financial and economic shocks that have emerged," Hurley said Tuesday.
"After more than a decade of very strong growth, domestic economic activity turned down sharply over the course of 2008.
"Economic growth had become quite unbalanced in the past few years as building and construction activity had reached unsustainable levels with property prices increasing beyond their fundamental levels.
"The current economic downturn reflects the interaction of a series of negative influences, both domestic and external, which have reinforced each other and, cumulatively, have had a significant dampening effect on activity."
Prior to the current downturn, the Irish economy had not experienced a recession since 1983. It enjoyed double-digit growth during the 1990s, earning it the moniker Celtic Tiger.
Copyright © 2013 AFP. All rights reserved. More »