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Tue 07 Jul 2007The economy at a crossroadsGrowth in the Irish economy is finally beginning to flag. But the economy has every chance of achieving a soft landing, where the pace of growth gently slows but does not disappear. The Economic and Social Research Institute's (ESRI) quarterly economic commentary, published today, puts numbers on these trends. The growth rate, as measured by real gross domestic product (GDP), reached a cyclical peak at 6 per cent last year. Now, the forecast is that the pace of growth will decelerate to 4.9 per cent in 2007 and 3.7 per cent in 2008. Reflecting the slowing growth rate, the pace of employment expansion is also forecast to slacken. Where additions to the national workforce reached 87,000 in 2006, they are projected at a more modest 25,000 in 2008.The decline in house building is the proximate cause of the deceleration in national economic growth. Truth to tell, it had to happen. In recent years, Ireland has been building half as many houses as Britain, a country with a population 15 times our size. Ireland simply could not continue to add to the national housing stock at the rate of the 93,000 units built last year. The ESRI points out that where house building accounted for 6.4 per cent of gross national product in 1996, its share had risen to 15.5 per cent of GNP a decade later. Growth on this scale was unbalancing the economy.