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Bank of Ireland, College Green in Dublin Photo by: AP

Ireland’s Central Bank reports - recovery still faces challenges

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Bank of Ireland, College Green in Dublin Photo by: AP

Ireland's exports are part of the key to its economic recovery, but weak consumer demand continues to weigh on the troubled euro-area economy, Ireland's central bank announced on Tuesday.

Although the Irish government remains on track to meet its bailout targets, the central bank said it still had much to do before it could resume borrowing from the markets.

Ireland's economy is expected to grow 1% of gross domestic product this year the bank announced, which is more than the 0.8% projected in July.

Although yields on Irish bonds have fallen in recent weeks, the bank claimed the Irish government must make 'very significant progress' to convince markets of the country's creditworthiness.

Meanwhile the Wall Street Journal reported yesterday that Irish finance ministry figures show Ireland's budget deficit widened to $27 billion through September, reflecting almost exactly the recapitalization funds the government has pumped into Irish banks.
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In March the government pumped $4.1 billion more into Anglo Irish Bank, Irish Nationwide Building Society and the Educational Building Society. And it pumped in a further $9.9 billion in recapitalization into the banking system following Irish central bank stress tests.

Excluding such banking costs, the underlying deficit is about $3.9 billion smaller than the same period a year ago, the finance ministry said.

Finance Minister Michael Noonan told the WSJ yesterday he was 'very pleased' with the central bank's new outlook, adding that he had feared a slowdown in the world economy would have harmed Ireland's economic recovery.

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