The rate of inflation will rise in 1994 before slowing in 1995, according to the OECD Economic Outlook published at the end of 1993. In the 12 months to the end of November, consumer price inflation registered 69.6 per cent on a annual basis, according to the State Institute of Statistics.
The OECD says economic growth will return to a more sustainable rate, of about 5 per cent in 1994 and 1995, after the high 7 per cent driven by private consumption expected in 1993. The OECD says growth is likely to have lost momentum in the second half of 1993.
In 1994, the fall in domestic demand will curb the rapid import expansion in 1993, and recovery in foreign markets will also boost exports, the OECD report says. Tourism revenues will continue to be depressed, but the current account deficit will decline to about 43/4 per cent of gross national product (GNP) in 1994 and 31/2 per cent in 1995, compared with the rapid increase to 5 per cent expected in 1993 from 1 per cent in 1992, the report says (MEED 17:12:93, page 5).
The government may be able to contain the public sector borrowing requirement if more determined efforts are made to discipline public finances after the local elections in March 1994, the report says. The budgetary benefits of tax reform will take some time to become apparent, but state revenues will be boosted by the increased pace of privatisation. Failure to improve public finances will lead to higher than projected inflation.