The Governor of the Central Bank today warned that economic recovery will take time but willl start to be seen next year
Speaking on RTÉ radio this morning, John Hurley said that he believed recovery would be slow.
"We know we are going to have a very difficult 2009. Our recovery is going to take time. It will be gradual. We're expecting to see the benefits of that in 2010. We will expect to see a gradual recovery but we have to be very, very cautious and indeed even humble in terms of forecasting in light of the significant shock that we're witnessing in the present time."
He warned that he believes that the decline in house prices is likely to continue.
"We have seen, I think, significant adjustment in price levels. This adjustment was inevitable. I would expect some further reduction over the course of 2009. It's anybody's guess where property prices will go in the future," he said.
Mr Hurley said the shock that emanated from the collapse of Lehman Brothers last September were still evident but that there were some signs of a bottoming out in the global economy.
He added that the European Central Bank (ECB) was closely monitoring the situation and said that 1 per cent was "not necessarily" the lowest level for European interest rates.
"We haven't taken any decision that this is necessarily the lowest rate. We never precommit. We have to assess the data as it emerges and make our decisions on the basis of that data," said Mr Hurley, who is a member of the ECB governing council.
Mr Hurley's comments come the day after the ECB opted to leave interest rates unchanged at 1 per cent but sharply downgraded its growth forecast for the euro zone.
The ECB predicts that the euro zone economy will contract in terms of real gross domestic product (GDP) by between minus 5.1 per cent and minus 4. 1 per cent this year and by between minus 1 per cent and 0.4 per cent in 2010.
Nobel Prize-winning economist Paul Krugman, who ruffled more than a few feathers recently with his 'Erin Go Broke' column in the New York Times, said today that the global economy is "stablilising but not recovering."
"The second year of this crisis will not look like the second year of the Depression," he said in a speech in Dublin this morning.
Added reporting: Bloomberg
