Michael Noonan (Limerick City, Fine Gael)

GDP data for the first half of 2011 confirm that recovery is under way. Growth is being driven by the traded sector, with exports of goods and services increasing by more than 6% on an annual basis in the first quarter and, despite weaker levels of activity in our main trading partners, by close to 5% in the second quarter. These strong levels of export growth partly reflect the very significant price and cost adjustment that have taken place and which are testament to the flexibility of the openness of the Irish economy. Given the openness of our economy, we will not escape unscathed from what is happening overseas. That said, the acyclical nature of some Irish exports and further competitiveness improvements will have some mitigating effects. Exports are still expected to grow by 3.8% in 2012.

There is no doubt that the external environment is becoming less benign and that this is a cause for concern. Uncertainty surrounding global growth prospects has increased since the middle of the summer, while the eurozone sovereign debt crisis has intensified. As a result, international organisations are in the process of revising down their short-term macroeconomic projections for many economies, including our main trading partners. This obviously has implications for Ireland's growth prospects. Consequently, in the medium-term fiscal statement published earlier this month, the Department of Finance revised its forecast for GDP growth in 2012 to 1.6%, down from 2.5% at the time of April's stability programme update. From our perspective, and that of the euro area as a whole, it is crucial we move forward as quickly as possible with implementing the decisions announced by the euro area Heads of State or Government on 26 October. Swift implementation will instill confidence and underpin the euro area recovery.

As regards Ireland's return to sovereign debt markets, based on the forecasts set out in the medium-term fiscal statement, the State has access to financing to cover its needs for the next two years. Nonetheless, it is the aim of the National Treasury Management Agency to return to borrowing markets at some point in 2012. To ensure that we can regain access to sovereign debt markets, it is vital that we continue to deliver on the terms of our EU-IMF programme of financial support. This means proceeding with the budgetary adjustments that will bring our deficit back to a sustainable level while continuing to implement the necessary reforms that will improve the economy's competitiveness. In doing so, we will create the correct conditions for fostering jobs and economic growth, which will, in turn, benefit the fiscal position and reinforce the sustainability of the State's debt.

See this speech in context