Joan Collins (Dublin South Central, People Before Profit Alliance)
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Question 43: To ask the Minister for Finance his response to the IMF's World Economic Outlook report and the UNCTAD report in terms of austerity; if he has read these reports; the impact their analysis might have for the economy here; and if he will make a statement on the matter. [27651/11]

Michael Noonan (Limerick City, Fine Gael)
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Like other reports that have been published in recent times, both reports consider that the recovery of the global economy has weakened considerably and downside risks have increased sharply. The International Monetary Fund's World Economic Outlook (WEO) was published on 20 September 2011. 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 UNCTAD Trade and Development Report, published 6 September, considers that, after a rapid post-crisis recovery, the world economy is slowing down from about 4% GDP growth in 2010 to around 3% in 2011, with developing countries showing stronger growth. The European Commission in its Interim Forecast published on 15 September revised down its forecast for global output to 4% in 2011 (a downward revision of about 1⁄2 percentage point compared to the spring forecast). 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 UNCTAD is of the view that fiscal contraction is harming overall growth at the global level. However the IMF Managing Director in her recent comments about fiscal consolidation at the global level was careful to distinguish between those countries that have the space to stimulate and those that do not. She was of the view that countries which have solid measures to anchor savings in the medium and long term can do more in the short term to accommodate growth. She specifically stated that the amount of available space depends, of course, on country circumstances. We are clearly in the category of first needing to put our budgetary position in order as soon as we can do so.

In this regard I would like to take this opportunity to reiterate this Government's firm commitment to restoring sustainability to Ireland's public finances. Clearly, this will present challenges for policymakers, but we must remain steadfast in our commitment to reduce the deficit to below 3 per cent of GDP by 2015. Accordingly, the agreed deficit target of 8.6% of GDP for 2012 must be achieved. Ireland needs to remain on a credible path of budgetary adjustment, particularly when there is so much uncertainty further afield. Through continuing to deliver upon our targets we can limit the risks of contagion and continue to rebuild confidence in this economy and return to a path of solid growth.