PARIS Nov 27 Ireland should be allowed miss
deficit targets set as part of an EU/IMF bailout if its economy
grows slower than expected, the Organisation for Economic
Co-operation and Development (OECD) said on Tuesday.
Ireland, which became the second euro zone country to be
bailed out two years ago this week, has avoided joining much of
the bloc in recession thanks to robust exports. It expects to
post its second year of economic growth in a row this year.
The government reiterated earlier this month that despite
trimming its forecast for the level of growth, it still expects
to cut its budget deficit to 3 percent of gross domestic product
(GDP) in 2015 from 8.3 percent of GDP this year.
However the OECD said it should be cut some slack if growth
"Reflecting a slowdown of the world economy, especially in
Europe, ongoing fiscal consolidation and tight credit
conditions, the recovery is expected to proceed at an only
moderate pace," the OECD said in its latest economic outlook.
"If growth turns out to be weaker than expected, however,
this should be allowed to show up in slower improvements in the
headline fiscal balance."
The Paris-based think tank sees Ireland's economy growing by
0.6 percent this year, broadly unchanged from its last forecast
and better than the downturn seen in the euro zone. It cut its
estimate for growth in 2013 to 1.3 percent from 2.1 percent.
That is a touch more optimistic than the 0.9 percent and 1.5
percent the government has pencilled in for GDP growth this year
Unlike the government, the OECD sees sharp falls in domestic
demand bottoming out in 2014 and not 2013, with the weak growth
keeping unemployment near a crisis-level high of 14.6 percent at
the end of 2014, just over a year before the next parliamentary
Ireland, which made a limited return to debt markets in
recent months, is lobbying Europe to ease the burden placed on
it by rescuing its banks and the OECD said a retroactive
recapitalisation of Ireland's viable lenders by European rescue
funds would contribute to a more positive outlook.