The Irish Economy is “bouncing along the bottom”.
That is according to the latest report from the Economic and Social Research Institute (ESRI).
In its quarterly economic commentary out this morning the institute is predicting a contraction in the domestic economy this year with a slight improvement next year.
It says the domestic economy which is measured in terms of GNP will decline by 0.2% this year.
Although it says exporters and foreign-owned companies will continue to do well enough to register GDP growth of 1.8% in the economy as a whole.
GDP is used in measuring the fiscal targets by the Troika.
The picture for 2013 is a little brighter with the economy set to grow by 2.1% in GDP terms.
The ESRI says the weakness of the domestic economy means that unemployment will remain high.
At the same time – it says – the balance of payments surplus is set to increase which is also reflecting the continued contraction of domestic demand.
The think-tank adds that the public finances have improved in the year to date but that the scale of the adjustment required is still substantial.
It the report it says that “even if there were no government debt and hence no interest payments, the budget deficit would still be large ”“ day-to-day expenditure continues to outstrip revenue”.
It also believes that the expenditure situation is “particularly difficult”.
It says some of the main expenditure areas – such as health and social welfare – are demand driven and that the precise cuts in public expenditure to be implemented reflect judgement about the relative merits of different forms of expenditure.
It concludes to say “Whether action is based on across-the-board decisions, or more specifically targeted, significant cuts in public expenditure need to be implemented to return the public finances to a stable pattern”.
David Duffy is a research officer with the ESRI.
He told Breakfast here on Newstalk the type of timeframe used in the stimulus package should be re-examined.