Ireland slashes 2012 growth forecast to 0.7%

Ireland on Friday slashed its growth forecast for this year to 0.7 percent from last December's budget estimate of 1.3 percent as depressed consumer demand drags on the eurozone economy's recovery. The government also revised the 2013 growth forecast from 2.4 percent gross domestic product expansion to 2.2 percent. "The government is keenly aware that the near term remains challenging and that there are very real risks to the forecasts due to the economic uncertainty within the eurozone," Finance Minister Michael Noonan said. Ireland's economy -- battered by a property market collapse -- returned to growth in 2011 and Noonan said financial data for the first four months of the year had been "relatively positive". "The Irish economy returned to growth in 2011, the first time since 2007; the State's underlying deficit for 2011 was 9.4 percent of GDP, significantly ahead of the target of EU/IMF target 10.6 percent of GDP; and the State's revenues are increasing," he said in a statement. Ireland had to seek an 85-billion-euro ($112-billion) rescue package from the European Union and the International Monetary Fund in 2010, when massive debt and deficit problems left it on the verge of collapse. Noonan said the deficit target of 8.6 percent of GDP for 2012 was on track because of the "likelihood that non-tax revenues are likely to be higher and debt servicing expenditure lower than estimated at budget time." On Thursday, the latest quarterly review of the Irish economy by the European Commission, International Monetary Fund and European Central Bank -- or Troika -- said fiscal targets for 2011 were met with "a healthy margin". The Troika said Ireland still faced "considerable challenges" and forecast economic growth would remain "modest in 2012, at around 0.5 percent". Under EU rules, member states are supposed to keep their annual public deficit -- the shortfall of revenue to spending -- at no more than 3.0 percent of GDP. Ireland will put the EU's new fiscal pact treaty, designed to prevent future eurozone crises, to a referendum on May 31.