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Ireland returned to growth last year and the economic recovery is projected to gain further momentum, despite ongoing budgetary consolidation. A recovery in Europe and North America should boost exports in 2013. With activity improving gradually, the labour market situation will slowly turn around and unemployment will stabilise. Inflation is projected to remain low, apart from a temporary energy and VAT-related spike in prices.
Progress in narrowing macroeconomic and financial imbalances is being made and needs to continue. It is the only way to gain further confidence of financial markets. Adjustment would be aided by a rapid resolution of growing mortgage arrears. Given the risk that high unemployment might become structural, reforms to public employment services and job training should be fully implemented to help job seekers return to work.
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