THE GOVERNMENT has formally lowered its expectations of growth in the Irish economy for 2012, nearly halving its original projection published in last December’s Budget.

The latest Stability Programme Update, published this evening, sees the Department of Finance revise downward its expected growth in Irish GDP, from 1.3 per cent in the Budget to a more modest 0.7 per cent.

The report also projects growth of 2.2 per cent in 2013, and an average of 3 per cent for 2014 and 2015, by which time Ireland is expected to have brought its Budget deficit within 3 per cent of its GDP.

This is in comparison to the EU-IMF projections of 0.5 per cent growth for 2012, 2 per cent in 2013, 2.5 per cent in 2014, and 2.8 per cent in 2015.

• In full: Read the April 2012 Stability Programme Update (PDF) >

The government’s update outlines that general government debt will peak at 120.3 per cent of GDP by 2013 – just over double the amount permitted by the terms of the Fiscal Compact – before reducing to 117.4 per cent by 2015.

After this point, Ireland will have three years to meet the Fiscal Compact’s target of keeping the Budget deficit within 0.5 per cent, and will be expected to knock one-twentieth off its debt levels every year.

Publishing the document this evening, Noonan put speculation of a potential ‘mini-Budget’ to bed by insisting Ireland would meet its deficit target of 8.6 per cent of GDP this year.

“Based on all of this information there is no change to the budgetary adjustment for the 2013-2015 period and our plans remain as set out in the Medium Term Financial Statement published in November 2011,” he said.

“We know that a sustainable public finance position is in the interest of all citizens, as it ensures that the State has the resources to pay for essential public services, such as health, social protection and education.”

In full: Read the April 2012 Stability Programme Update (PDF) >