New report says Irish emigration, unemployment set to grow

The ESRI estimates that although unemployment and emigration are both forecast to continue to grow, the unemployment figure will naturally be affected by the emigration figure.

(DUBLIN) - A new Quarterly Economic Commentary report published by the Economic and Social Research Institute (ESRI) in Ireland estimates that with the eurozone crisis continuing to cast a shadow over any possible Irish economic recovery, tens of thousands will continue to emigrate from the country in 2012.

“The financial crisis currently gripping the eurozone, coupled with tightening fiscal policy across the region, are likely to send the eurozone back into recession,” the report reads. “Against such headwinds, Ireland’s road to recovery will become much more difficult, dependent as it is on export-led growth. In the near-future we should be able to continue to meet our fiscal targets, but it will become harder to do so as the external environment becomes increasingly unfavorable.”

Announcing its latest predictions for 2012, which are worse than initially thought, the ESRI says it expects the Gross Domestic Product (GDP) in 2012 will grow by just 0.9 per cent, as the government’s emphasis on an export-led economy is undermined by global economic fears, and people simply consuming less than they did previously. The body had previously estimated this growth level at 2.25%.

“Exports are forecast to grow by 6 per cent this year, but with external demand expected to be weak next year, we have reduced our forecast for 2012 to 4.7 per cent,” the ESRI says.

Forecasting that amidst the economic turmoil, Irish households will continue to spend less, the ESRI says that, “The ongoing fiscal consolidation and lower export demand will combine to decrease disposable incomes this year and next.”

With people holding onto what little they have, the think tank says this will have obvious results for the Irish economy.

“The savings rate is expected to remain elevated as some households continue to hold precautionary savings, while others continue the process of deleveraging. Consequently, consumption is expected to fall this year by 1.8 per cent and again in 2012 by 1.5 per cent.”

The ESRI estimates that although unemployment and emigration are both forecast to continue to grow, the unemployment figure will naturally be affected by the emigration figure.

Much of the expected job losses - an estimated 1,807,000 people in work decreasing to 1,785,000, a drop of 22,000 – will not show on official registers, as 40,000 are expected to leave Ireland in the same period. Emigration for 2011 sits at an estimated 35,000. In 2012, unemployment is expected to average 303,000 – a staggering 14.5%. The ESRI had previously estimated 2012’s jobless rate at 13%.

Despite the ESRI’s newfound pessimism, however, Irish Finance Minister Michael Noonan said that he will not make changes to any planned spending cuts in Ireland’s upcoming budget.

Meeting with other EU finance ministers, he told reporters as he left the gathering that although “the ESRI is a state agency that we take a lot of notice of…the question is will this change the approach to the budget…but it won't.”