Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Question 187: To ask the Minister for Finance his response to the IMF report of 20 September 2011; and if he will make a statement on the matter. [26072/11]

Michael Noonan (Limerick City, Fine Gael)
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The report referred to is the International Monetary Fund's World Economic Outlook (WEO) published on 20 September 2011. The IMF considers that the recovery of the global economy has weakened considerably, and downside risks have increased sharply. The IMF forecasts world growth of about 4% in both 2011 and 2012 (revised down from 4.5% for both years in the April WEO forecast). However, they point to the recovery being very unbalanced – with growth of 6.4% forecast for emerging market countries for 2011, but only 1.6% for advanced economies. The European Commission in its Interim Forecast published on 15 September also revised down its forecast for global output to 4% in 2011. Reflecting this weaker global outlook, the Fund revised down its growth projections for the Irish economy in 2011 and 2012. It now expects growth of 0.4% this year and 1.5% next year, representing downward revisions of 0.1% and 0.4%, respectively, from those published in the previous WEO in April. It is important to note, however, that these revisions were made prior to the release of second quarter national accounts data by the Central Statistics Office which confirmed that the Irish economy grew at a very strong pace in the first half of this year. Real GDP increased by 1.9% and 1.6% in the first and second quarters respectively (on a quarter-on-quarter basis). Furthermore, the Fund continues to anticipate average annual growth of around 3% in the Irish economy over the medium term (2013 to 2016).

The IMF is forecasting GDP growth in the euro area of 1.6% in 2011 (unchanged from its April WEO) and 1.1% in 2012 (revised down from an April forecast of 1.8% in 2012). They consider that high public deficits and debt, lower potential output, and mounting market tensions are weighing on growth in much of advanced Europe. Their forecast is for a slowdown in activity for much of Europe, with risks to the downside. The EU Commission in their Interim Forecast showed that economic growth in the EU and the euro zone slowed down considerably in the second quarter of 2011 but said that, due to the stronger-than-expected first quarter, GDP growth in the euro area for 2011 as a whole is set to remain unchanged from their spring 2011 forecast at 1.6%. The Commission considers that, although risks to growth have increased in the EU, a double dip recession is not likely.