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Dublin lifts 2012 GDP forecast, trims next 3 years

Shadows of shoppers are seen in Grafton Street in Dublin, Ireland in 2011. Ireland lifted its 2012 economic growth forecast, but cut its predictions for the following three years due to ongoing fallout from the eurozone crisis, the government said.

Ireland lifted its 2012 economic growth forecast on Wednesday, but cut its predictions for the following three years due to ongoing fallout from the eurozone crisis, the government said Wednesday.

Irish Gross Domestic Product (GDP) is expected to grow by 0.9 percent this year, the Department of Finance announced in its medium-term fiscal statement.

That marked a modest upgrade from April's estimate of 0.7 percent and was in line with expectations of robust activity in the third quarter, or three months to September.

However, Dublin also reduced its 2013 growth forecast to 1.5 percent from the previous level of 2.2 percent, and blamed the deterioration in external markets -- in particular lower growth levels in Ireland's trading partners.

Further ahead, the former 'Celtic Tiger' economy was expected to expand by 2.5 percent in 2014 and by 2.9 percent in 2015. That compared with prior estimates for 3.0-percent growth for both years.

"The pace of GDP growth in some of our key export markets has slowed and, in some cases, has moved into negative territory in recent months. The intensification of the euro area sovereign debt crisis in late-spring has been an important contributory factor," the statement said.

"Fiscal consolidation is another factor weighing on aggregate demand in many regions, while relatively high oil prices ... are reducing disposable incomes in many of our trading partners," it added.

Debt-plagued euro member Ireland was rescued with an enormous 85-billion-euro EU/IMF bailout in late 2010.

Dublin stressed on Wednesday that it remained "fully committed" to meeting its own fiscal targets and reducing its deficit to below 3.0-percent of GDP in 2015 in line with the terms of the bailout programme.

"The government believes that the previously identified fiscal adjustment path remains appropriate given the need to support the emerging economic recovery," the statement continued.

This year's general deficit was estimated at 13.5 billion euros ($17.18 billion) or 8.3 percent of GDP, well within the 8.6 percent deficit limit set by the European finance ministers at an ECOFIN Council meeting in December 2010.

Officials also noted that fiscal consolidation estimates for the next three years remain the same.

Given that a significant level of fiscal adjustment is required to reduce the deficit below 3.0 percent, a series of revenue raising and expenditure reducing measures are required.

These remain as previously estimated at 3.5 billion euros for 2013, 3.1 billion euros for 2014 and 2 billion euros for 2015.

In a separate development on Wednesday, Fitch Ratings agency reaffirmed Ireland's credit rating at "BBB+" -- two notches above junk status -- but it also upgraded the country's outlook to stable from negative.

"The affirmation and revision of the outlooks to stable from negative reflects Ireland's continued progress with its fiscal consolidation, external adjustment and economic recovery, as well as the sovereign's improved financing options," the agency said in a statement.