Brian Cowen (Laois-Offaly, Fianna Fail)

As is usual my Department published the annual economic review and outlook, ERO, in mid-August. The economic forecasts for 2005 contained in the ERO were based on data to the end of July. The ERO forecast was broadly unchanged in overall terms from that published on budget day, with growth in real GDP again forecast at 5.1% and growth in GNP revised upwards slightly from 4.7% to 5%.

The composition of the two forecasts, however, was different. The forecasts for domestic demand were significantly strengthened in the economic review and outlook. In particular, the forecasts for personal consumption and investment were increased as lead domestic demand indicators such as retail sales, tax revenues, etc. indicated the domestic economy was growing more strongly than anticipated on budget day. In addition, the projected increase in employment in 2005 was revised upwards on foot of strong data for the first quarter of the year. However, weaker than expected trade data and higher oil prices prompted a significant reduction in the forecast contribution from net exports. The forecast for growth in exports of goods and services was reduced from 7% to 3.9%. My Department will update the ERO view on budget day in December. Account will be taken of all published data since July when framing the budget day forecasts.

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