The Central Bank has forecast a continuation of the gradual recovery in economic activity that is currently under way, though at a slightly slower pace than previous forecasts.
In its first quarterly bulletin of the year, the Central Bank said a slowdown in Ireland's main export markets will impact on growth.
In its bulletin, the Central Bank has pencilled in GDP growth of 1.3% this year. This compares with 1.7% in its previous forecast, and reflects a less favourable international outlook.
For the domestic economy, the bank has projected GNP growth of 0.5%, and growth in employment of 0.3%.
While the employment growth is small, it is the first projected growth since 2007. The Central Bank added that all of it will come from the private sector
But the bank raised its forecast for economic growth for 2012 after better than expected retail sales data.
It said it expects GDP to grow by 0.7% in 2012 - the second year of growth since 2007. This is an increase from its earlier estimate from 0.5%.
The Central Statistics Office is due to release 2012 GDP figures in March.
The bank warned that due to Ireland's high dependence on exports, further progress is needed to reduce costs in the economy to improve competitiveness and increase flexibility, especially in the public sector.
Gerard O’Toole Director of Touhy O’Toole commented “this latest bulleton from the central bank breaks into sharp focus the fragile nature of our export lead economy due to international issues outside of our control. Without improved consumer confidence which should bring about domestic spending, our economy will not show the growth levels that we need in order to produce new jobs. On a brighter note, the central bank comments that next year should see some recovery in the construction sector and this should be welcomed. How this news feeds into the property sector remains to be seen, but it will be at least be the end of the first quater 2013 before we will see any trends emerging for the year ahead.”