DUBLIN, Oct 5: Ireland’s economic growth will slow to 4.75 per cent this year and ease further to 3.50pc in 2008, the country’s central bank said on Friday.

It said in its latest quarterly bulletin that Ireland’s domestic economy continues to perform solidly in the current uncertain international environment following a period of high growth.

“This is underpinned by a good budgetary position, strong employment growth and an adaptable economy,” the bank said.

The bulletin added that the impact of recent financial market turbulence on the international, as well as domestic economy, remains difficult to assess.

But it said the “broad re-pricing of risk in financial markets has tilted the balance of risks to activity to the downside.” Allowing for these factors, the bank forecasts both GNP and GDP growth this year to be in the region of 4.75 per cent, “given the relatively strong start to the year.” In its last bulletin in July the bank forecast both GDP and GNP growth this year would stand at 5.0 per cent.

The bulletin forecast “somewhat lower growth next year, perhaps of about 3.25pc GNP (3.5pc GDP), mainly reflecting slower domestic demand growth.”

“This is likely to be accompanied by an easing in inflationary pressures and some limited rise in unemployment.” GNP is the more favoured Irish growth measurement. It is regarded as a more accurate barometer of the country’s economic performance since it strips out substantial profits repatriated by foreign investors.

The bank said the outlook could be affected by external risks, in particular any slowdown in growth in the US economy, with which Ireland has close trade and foreign direct investment links.

High oil prices and significant exchange rate movements, perhaps as part of a correction of global imbalances, could also have an impact.

“The important point is that the responses of domestic social partners and policymakers ensure that the adverse effects of such factors are minimised and that economic growth continues at a satisfactory rate”.—AFP