The International Monetary Fund (IMF) has issued an improved forecast for the Irish economy, indicating less shrinkage in the national economy this year than previously anticipated.
"The world economic recovery is proceeding," Olivier Blanchard, the IMF’s economic counsellor, told the press on Tuesday. "But it is a geographically unbalanced recovery."
Despite a welcome hint of optimism regarding Ireland's performance, the fund left its forecast for Irish economic growth in 2011 unchanged, at 2.3 per cent, however this anticipates a decline in Irish joblessness, from a peak of 13.5 per cent this year to 13 per cent next year.
Responding to the latest figures Jorg Decressin, the assistant director of the IMF research department, said that a dramatic fiscal adjustment was absolutely essential to Ireland's recovery.
"What is needed is a very strong medium-term plan, but markets are also demanding a downpayment. That is why we actually support the tough measures that the Irish Government is taking."
"Ireland would be helped by stronger net exports because the global recovery is gathering steam," Decressin added. "That will help pull the Irish economy along."
Blanchard said some countries had the leeway to reconsider austerity measures if growth was lower than expected.
"In countries such as Ireland or some of the southern European countries, Greece for example, there is really no choice than to do fairly dramatic things in as clear a manner as possible."
Meanwhile the Irish Finance Minister, Brian Lenihan, arrived in Washington to hold bilateral meetings with his European and North American counterparts before traveling to New York on Sunday to reassure U.S. investors.